General Principles

Some Carriers and Forwarders have regarded claims handlers simply as administrators in the broadest sense, just organisers of paperwork and administrative procedures who have no commitment to a specific discipline. They fail to see that claims handlers must be specialised operational staff who deal with the more difficult facets of customer relations. This failure of perception has sometimes led to unsuitable personnel being assigned the task, and it seems very clear that the ideal person for this job is, in fact, one whose experience of the industry is wide and full.

Because losses during transit are more serious for Exporters and Importers, such companies have tended to be somewhat more alert to the real needs. Either a senior man (with some appreciation of the effect losses have on the company balance sheet) is likely to be assigned to the task, or a youngster is drafted in to assist such a person, who then aims at close supervision of the assistant.

The claims handler is actually an operational staff member. However, general principles of administration which seem of peculiar value in the claims-handling world.

Assumption of future litigation

It is a practical working supposition that any claim may have to be pursued or defended in court at some stage, even if the vast majority never get anywhere near there. Many claimants reluctant at the thought of court action, but the requirements for actions involving “minor” claims are now comparatively simple, and for a modest sum a claimant can issue a writ and force a unwilling respondent into court.

Scruffy and hard-to-understand papers presented either to support your claim or to defend your position will not facilitate your action or defence. If the judge who examines the papers has problems in understanding your position, but understands your opponent’s, then you are in for probable disappointment. Accordingly, the highest standards of file maintenance are recommended: here, “fussiness” is a positive virtue.

Claims have a habit of becoming dormant for long periods: if you have to pick up a file you have not looked at for six months, give yourself a chance easily to re-familiarise yourself with it by having made sure it was tidy and easy to read in the first place.

General Structure of the File

Having accepted the working assumption that your file may have to be produced in court at a later stage, you must recognise that alteration of original records may well be a contempt of court or fraud of some sort if detected. If such an alteration goes to the heart of the claims dispute, then your defence may simply disappear. Thus, the construction of the file, as it develops, becomes paramount, and your judgment is vital.

The claims handler may well be required to guide a warehouseman as he makes out his first report of an incident and, while positively avoiding untruths, the claims handler is entitled to guide the wording to place his company in the best possible light.

The general rule should be that all documents having any bearing on the matter in hand should be included in the file. The omission of any relevant document can, at the least, cause embarrassment, and, at the worst, destroy your case. Of course, if the case gets to court, should the court gain the impression that you have suppressed vital information or deliberately excluded it from your papers, then serious trouble can ensue. Thus, it becomes clear that the integrity of the claims handler is fundamentally involved in this process.

File Creation
A separate file and filing location

Whilst an exporter or importer is almost certain to create a separate file for each claim, the Carrier or Forwarder may not, because he will have file drawers full of B/Ls, and it is not unusual for claims papers to be simply pinned to the relevant and put back in the drawer. This is unwise because such copy B/Ls are usually on very light-weight paper and often get mixed up. The loss of an old copy B/L may not be a problem, but the loss of a claim file can produce serious problems and often an inability to defend a claim at all. Thus, a separate storage location for claims files is urged.

Claim Number

Since cargo claims can often have a life of one year or more, any Carrier or Forwarder builds up a significant portfolio of live, but possibly dormant, claims. Accordingly, provided the files are maintained separately from operation files, the B/L number can be used as the filing reference. Alternatively, a different file numbering system may be felt appropriate.

At some stage, it is likely that an analysis of claims records will have to be carried out for insurers, or perhaps it is perceived that a reserve fund must be built into budgeting against claims which may have to be settled. If the numbers are sufficient a computer database may be appropriate.

Maintenance

To reverberate earlier points here above, there are three specific maintenance principles to apply to file maintenance.

Timetable

Avoid simply rushing papers together in any order as they are received. A claim file should be a “moving picture”, if the documents are in the firmest chronological order, it is possible for a newcomer to the file to read the papers in order and to develop a clear and precise understanding of how the claim arose, what efforts were made to resolve the problem and how the claimant’s demand for compensation was dealt with. Chronology so strict that papers such as facsimiles and e-mails with identical dates are filed in order of the time at which they were generated can be vital to understanding.

Such principles may be applied to matters other than claims, but the peculiarity of claims is that they “stutter”, there are periods of great activity followed by periods of long inactivity. If after several months of inactivity a claim becomes active, it is always necessary for the handler to re-familiarise himself with the case. Chronology applied strictly to the file will always facilitate this.

Duplicated Documents

Duplicate documents can be a curse and a serious obstacle to the understanding of a claim file. As parties involved in the claim correspond, they attach copies of B/Ls, invoices and Packing Lists, and so on, to their communications. Simply including the attachments in the file can lead to serious confusion for anyone who needs to access the central file.

On receipt of correspondence with attachments, it is prudent to remove duplicated documents, after, of course, having made certain that there is no comment or legend thereon which justifies its inclusion at that point in the file. If there is, then it is wise to make an additional note on the duplicated document, which will remind you why it appears in the file at that point.

Clarity of Documents

It seems clear that legible documents are vital to efficient claims handling. For example, claim submissions are often countered by sending a copy of a delivery signature, purporting to evidence no visible damage at the time of delivery. A third or fourth copy of such a document, faint and bearing alien comments caused by writing on an unrelated document placed over it at some earlier stage will cause more problems than it should solve, and the copy may in fact be unusable if it cannot successfully be photocopied or faxed.

It seems clear that claimants should bear in mind that respondents need clear copies of invoices and Packing Lists with which to work: nothing is more likely to hold up processing of claims than confused copies. If the copy you have is not good enough, then seek the best possible one available. Of course, it may simply be impossible to obtain an improved one, and it may be necessary to arrange to produce the actual poor original in your file to the company with which you are corresponding. This is all very awkward, and usually avoidable if action is taken early enough to obtain the appropriate clear and legible copy.

Which Records to Maintain

The Carrier or Forwarder facing a claim, or even a Forwarder seeking to have a Carrier settle his client’s claim, will need to keep the most detailed file. The claimant’s file is unlikely to require such detail, if, indeed, the claimants’ insurer has not settled with him and taken over the claim against the Carrier or forwarder.

Accordingly, the guidance offered here is given from the Carrier’s point of view, Forwarders and claimant Exporters and Importers can browse through a listing of the Carrier’s file and note which documents may be important to them.

If claimants take legal action, they eventually reach a stage of “discovery”, where the court orders that documents from each side be exchanged. Claimants and legal representatives may obtain some guidance on the documents which may or should be in a Carrier’s or forwarder’s file when turned over to them.

It will be evident to handlers with experience of the freight industry that the listed documents denote a strict chronology, paralleling the development of the transit history.

Useful comments are made on the documents listed. Their purposes, interpretation and use is also indicated where appropriate.

Regular documents

A. Packing List(s):

This should show the contents of each package and its weight. Important in inventorying packages which have been pilfered and confirming, together with the shipping invoice(s), that claim calculations are correct

ii.            Where a consignment comprises a single package, there may not be a separate Packing List.

iii.            Consignments of perishables seldom have separate Packing Lists, even where there are different commodities within the same shipment.

 

Shipping invoice(s)

i.            This helps to establish and prove the claimant’s right to pursue a claim.

ii.            In the majority of claims it proves the value or part of the value of the claim.

iii.            Values thereon do not apply where the claimant bases his claim on the market price at destination, in which case it will be necessary to provide some other document as evidence of value.

 

Booking sheet:

i.            This should evidence the taking of the booking by the Carrier or Forwarder when the exporter contacted him originally.          ii.            It may evidence what the original intentions of the exporter were with regard to carriage.

iii.            It may resolve disputes about incorrect bookings, where, for instance, a consignment of greater weight or dimensions than originally expected is presented for carriage, and is consequently delayed in some way.

Truck delivery notes (to Carrier or forwarder):

These prove when and where consignments were delivered, and are prima facie evidence that the goods were in sound condition at that time.

House Carrier waybill (PACKING LIST)

i.            This exists only if the consignment was to form part of a consolidation.

ii.            It is evidence of the contract of carriage made between the exporter and the forwarder.

iii.            Intended routing should be apparent, and may be needed where the Forwarder contracted for the whole movement, and then subcontracted part only to a Carrier.

iv.            Booked flights should be shown, but do not necessarily appear.

Consolidation manifest:

i.            This exists only if the consignment is to form part of a consolidation.

ii.            It lists the different consignments within the consolidation.

iii.            Analysis of weights and numbers of packages can sometimes reveal whether the consignment or part of the consignment was omitted from the consolidation.

Pallet tags and/or pallet manifests.

i.            A Forwarder building a pallet or pallets, or stuffing a container or containers for a consolidation should retain a form of record showing what was loaded on or in which capacity.

ii.            The study of such records should aid investigations into losses, including possible mis-routings.

Loading manifests:

i.            These list the entire cargo load on a Transportation Means.

ii.            They should aid investigation of losses.

iii.            For some reason Carrier are often reluctant to release these documents, although there seems no obvious rationale for this.

 

Check loading lists:

i.            These are normally manifests listing the cargo by packing list. Destination warehousemen mark them to show receipt of cargo. If the tallying of packages has been simple and straightforward the number of pieces on the manifest is usually ringed.

ii.            Shed storage location is normally shown.

iii.            Sometimes the warehouseman will add a remark about damage noted on delivery.

iv.            They should assist in confirming receipt of a consignment into a warehouse.

 

Out-turn report:

i.            A report should be posted back to the origin station, either confirming receipt of cargo in order, or noting irregularities. Both shortage and damage should be notified to the origin station.

ii.            Sometimes cargo received but notified.

iii.            It sometimes assists in confirming irregularities relevant to the claim.

 

Tracing records:

i.            These are normally e-mails and faxes to relevant stations requesting searches for missing cargo.

ii.            Forwarders often have a tracing record sheet and, since sometimes dozens of tracing messages and answers arise, it is suggested that the strict rule of chronology be suspended for this one facet only. It makes good sense to attach all tracers and answers to the record sheet to avoid unnecessary complexity in the file, and because they are subset of the main file anyway.

 

Damage report:

i.            This is usually made out by a warehouseman, usually a supervisor, on noting damage to cargo.

ii.            It is a vital aid to confirming nature of and time and date of the damage incident.

 Delivery note:

i.            This is a vital document evidencing on a prima facie basis the number of pieces delivered and whether a consignment had visible damage at the time of delivery.

ii.            May carry specific “notes”: comments about apparent damage or simply a remark such as “see damage report” or “see” cargo irregularity report or “see” irregularity report. It is noted that some Carriers  have been known to insist on such a signature, and then refuse to release the report referred to!

Notice of claim:

i.            Notices of claim are required in most, but not all, claim situations, and are required to be given within a specific time.

ii.            A respondent needs to confirm to its satisfaction that the notice has been given properly.

iii.            A claimant needs to be able to prove beyond reasonable doubt that he has given such a notice of claim.

In general terms the above documents are basic requirements, subject to the needs of the case in question. They usually have to be sought and requested, to enable the claims handler to have a basic understanding of the claim situation. All other documents which go to make up the latter part of the file usually flow fCarrierly naturally as the claim is prepared on a formal basis, submitted to the respondent, and the respondent considers the relevant papers.

Extra Documents

Ordinary

It is self-evident that, depending on the complexity of the cargo’s movement, there may be intermediary but reasonably routine documents at the beginning of the transit and at the end, after delivery out of the Carrier. These will comprise such documents as receiving and delivery sheets peculiar to Forwarders involved. Each claimant must assess the need to see these documents based on the particular circumstance of the subject claim.

Special

It is also clear that there are additional documents from the Carrier’s point of view, having to do with the movement of cargo and the transportation means, but, in general terms, the above items should be sufficient to enable a clear picture of a transit history and claims situation to emerge.

When documents additional to those above are sought, the likelihood is that the claim is a serious one under significant dispute and being handled by people with expertise and special knowledge in this field. Dead load weight statements, notifications to the Carrier and loading sheets showing remarks and bulk cargo were loaded on the transportation means, among other documents, are included in this category.

REVIEWING AND PROGRESSING

A claimant exporter or importer tends to be a party who makes settlement of a claim a priority, and thus needs no encouragement to review the claim file on a regular basis or to chase respondents. Accordingly, it is the Carrier or Forwarder processing a claim made against him, or a Forwarder pursuing his client’s claim against a third party, who may benefit from suggestions on general monitoring of claims progression. Thus, the following observations are mainly for the benefit of the party claimed against.

However, claimant Exporters and Importers will be able to see what the respondent should reasonably be doing, and this may enable them to bring pressure to bear in a more effective way.

Each live file should be routinely checked every now and then to ensure that necessary action on it has not been overlooked. For example, a claims handler often promises to revert to a claimant after having carried out more than one inquiry to different locations and to different personnel. One or more of the persons who have been questioned may delay in responding, and it is not difficult to overlook completing the inquiry because of delayed responses. When the claimant chases him up for a progress report, it is often very uncomfortable for the handler to discover that he had not ensured completion of the inquiry. An explanation that one of the inquiry lines has not responded falls flat if the claimant asks what has been done to expedite that inquiry, when perhaps only one letter or fax was ever sent.

It is preferable to be able to report to the claimant that the handler has pursued the inquiry line by various means on various occasions. Indeed, if the handler has done this, then the inquiry may have been answered anyway, or he may have been able to formulate a means for overcoming the lack of information in some other way.

Other examples of unpleasant situations which could have been avoided by efficient administration no doubt suggest themselves. They always look bad and damage customer relations significantly. Thus, claims handlers should seek to avoid such situations and efficient reviewing techniques are indispensable.

Diary & Database

The efficient maintenance of a “progress” diary, if the number of claims being handled is not large may be adequate, depending on the company’s requirements. If the numbers of claim handled are large, then the use of a computer database is indicated. It is simple to set up the program to print out a list of files on a due date which can be reviewed for action.

Database spin-off

A computer database can provide analysis of claims, providing a wealth of useful information. It can be ascertained whether there is an increase over a period of time in a certain type of loss, or an increase in the frequency of a particular claimant making claims, which will enable policies to be formulated to reduce or eliminate such claims. That is, of course, an aspect of risk control. Total aggregate exposure to claims settlements can be ascertained; the company’s insurers will need to know this, as will the company accountant, in order to pay claims settlements which are agreed. Other applications can be formulated, of course.

CORRESPONDENCE STANDARDS

The standard of letters and other communications from the claims handler reflects totally on the image of his company. The claims handler can at times find himself in the vanguard of customer relations. Competence in the written language is a prerequisite, and all communications leaving the office should be presented as well as possible. Sound grammar and punctuation demonstrate professionalism, and are undoubtedly vital aids to the clear expression of ideas.

It seems that many people sometimes adopt in business correspondence an effusive and slightly arrogant tone, which may cause amusement or annoyance in the receiver. A lack of respect is also a common reaction in the reader, the opposite of what the writer probably intended. The guiding principles should be simplicity, shortness and clarity. Approachability, if the situation permits, is a worthwhile additional aspect, but is often out of place when a dispute is under consideration. The ultimate guide which none should ever forget is “if you would not say it, then do not write it”.

All originators of correspondence should read their draft letters out flashy every now and then, and judge whether their words could reasonably be one half of a business conversation with the person who is going to receive the e-mail or fax. If the originator could imagine listening to someone saying those words to him and he turns, then the letter needs revising.