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In Chapter 1, we identified the components of Salvage Management and
in Chapter 2, we discussed the way in which salvage is being handled
and also identified the shortcomings therein. Now, keeping in mind the
discussion in earlier chapters, let us discuss as to what actually is,
or should be, the purpose of Salvage Management.
Purpose of Salvage Management is manifold. Basic purpose of salvage
management, however, remains to maximize the realization through
salvage disposal. Although the purpose of salvage management may be
derived from the shortcomings of present salvage handling system
itself, to make it further easier to understand, let us discuss the
purpose point wise. Nine major purposes of salvage management may be
identified as under:
1. Educating the Insured about the importance of salvage:
An insured need to be educated about the importance of salvage and
that it means hard cash for both the Insurer and the Insured. As
salvage managers, it is our prime duty to communicate the same to the
Insured and request them to appreciate the concern over salvage. In
fact, appointment of a salvage manager or a person dealing
professionally in salvage by Insurers, in itself should be a message
to the Insured that we care about the salvage.
2. Accounting for and Protection of Salvage:
As pointed out in Chapter 2, there is a possibility of salvage
misappropriation either intentionally or unintentionally while it is
kept at the Insured’s place during the claim settlement period. A
Salvage manager is required to keep in touch with the salvage
merchandise, keep a day-to-day account to the extent possible,
specially in case of bulk salvages and re inventorize the salvage
before actual lifting or even if the same is retained by the Insured.
Also, help protect the salvage from further deterioration and try and
make the salvage presentable to the proposed buyers during inspections
are important duties of a salvage manager.
3. Speedy Salvage Settlement:
It has to be understood as a salvage manager that more the salvage
settlement is delayed, lower the realization of salvage, except in
exceptional cases where the market of salvage inflates like in case of
,say, jewelry, gold etc.
4. Marketing the Salvage:
Once the salvage merchandise is identified and accounted for, next
step is to identify the market for that salvage, a limitless market.
Proper salvage marketing without any boundaries is of utmost
importance so as to ensure quality buyer response and cut short the
chain of intermediaries who are the only ones taking benefit out of
salvage realization. We will discuss in details in Chapter 4 the
possible methods of marketing salvage.
5. Creating competition among buyers:
After having identified the proper market for salvage and approached
interested proposed buyers from the market a salvage manager needs to
create some sort of competition among those buyers, as the buyer’s
intention will naturally always be to earn the maximum out of deal.
There are various methods of creating competition among proposed
salvage buyers which a salvage manager uses. The methods shall be
discussed in Chapter 4.
6. Ensure buyer genuinety and quality:
It may be possible to find many buyers for salvage but a salvage
manager should always be confident about the genuinety of a buyer
before entering into a transaction with him. Genuinety here not only
means the financial capacity of the buyer to transact, but also the
genuinety as a business citizen of the country. For example, the
manager should check the PAN No., TIN No., Telephone No., Email id,
Postal address and so on.
Apart from being genuine, a salvage manager needs to ensure that the
buyer is of quality. It should ideally not be like the buyer is buying
everything from a pin to airplane. The Manager should concentrate more
on the end consumers or at the least try to cut the chain of
intermediaries as short as possible.
7. Formulate terms of sale, supervising disposal and payments:
A salvage manager, in coordination with the Insured and the Insurers
and depending on the nature of deal should formulate and suggest
various terms and conditions which are necessary to facilitate a
smooth and legitimate transaction. For example, fixing the period
within which buyer would lift the material, or fixing the period or
schedule of payment, or the terms relating to the transportation and
so on. As already pointed out earlier, a salvage manager is advised to
act only on the behalf of Insured, Insurers being facilitators of
salvage sale. An agreement may be entered between the Insured and
salvage manager agreeing to all the terms and conditions of salvage
sale. This should be the most legitimate way of selling salvage.
8. Inventorise/ Re inventorise the salvage:
While the salvage is being lifted by the buyer, or even if retained by
the Insured, salvage manager should Inventorise/ Re inventorise the
salvage before settling salvage.
9. Fairness and Transparency:
Maintaining overall transparency and fairness among buyers, Insurers,
Insured and Surveyors should be considered as a religion of a salvage
manager. Creating buyers’ trust in the system of salvage sale is of
utmost importance, which has been missing till date in the insurance
industry.
Conclusion:
The ultimate purpose of Salvage Management is to maximize the salvage
sale proceeds. But to achieve that, there is a series of steps that
needs to be taken into consideration and adopted. Maintenance of trust
and fairness is of utmost importance. |
