Insuring the Cold Chain

Jul 28, 2022

It’s no surprise to those who work in the industry that cold chain is complex. The act of keeping a valuable pharmaceutical product at the right temperature for the right amount of time is a balance. Packaging performance is just one piece of the puzzle, and arguably it’s the easiest to control. 

A recent article in Supply Chain Brain outlines variables that make cold chain shipments challenging and describes how these were exacerbated by the COVID-19 pandemic. The author also shares how the perceived risks of shipping perishable products leads to an imperfect formula for insuring valuable products on their journey to a patient. Insurance companies most often rely on a blend of shipment volume and characteristics, company claim history, overall industry risk values, and inflated premiums to cover contingencies, according to the article. Additionally, claims add costs for a surveyor to investigate.

The solution? Better data. Data closes the gap between real and perceived risk, and cold chain companies like ours continue to grow in this area. Cold chain and courier companies are increasingly using advanced asset management software systems to monitor temperatures and ensure packages are shipped to the right place, at the right time and arrive in the right condition. 

A key development includes real time monitoring of payloads via smart loggers and devices that are interconnected to the Internet of Things (IoT), making it possible to access and assess the condition of the payload in transit. Being alerted about a temperature excursion by the shipper before it reaches its destination allows preventive or corrective supply chain actions earlier than would have otherwise been possible, especially if hand-couriered to a final destination.

When exact location and condition is not needed, another class of smart devices can be used. These are just in time (JIT) devices, and they often use other methods of communication when passing through a physical IoT gate or provide a download of data via Bluetooth, QR code, bar code, USB connection or other method. This data includes logged temperature information or the number of times the payload was opened, which can be assessed at the end of the journey.

As the article suggests, good data provides the ability to construct tailored coverage models. And good data does exist.