• Project Title:
  • International Mail Indemnity Claim Costs
  • Start Date:
  • Monday, September 9, 2019
  • Estimated Report Release Date:
  • March 2020

The Postal Service offers insurance against loss or damage when shipping packages. Some products, like Priority Mail International and Priority Mail Express International, include insurance in their postage price. Customers can choose to purchase up to $5,000 in additional coverage for a fee. A customer files an indemnity claim when seeking reimbursement for loss or damage to an item mailed with insurance. 

From Fiscal Year (FY) 2016 to FY 2018, the Postal Service did not cover costs related to Outbound International Insurance payouts. The Postal Service paid about $16.3 million for international mail indemnity claims during this time period — contributing to a net loss for three consecutive years.  

We would love to hear from you.

  • How important to you is the option to buy insurance when choosing an international shipping service?
  • Do you believe international package insurance prices are fair and reasonable?
  • How could the Postal Service reduce international indemnity payments (e.g., insurance payouts)? 
  • Do you think the Postal Service could improve its international insurance payment cost attribution process?

Comments (1)

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  • anon

    I would definitely opt-in for additional insurance if the actual value of the content is not worth the risk of possible loss or damage. I’d surely consider Priority Mail International and Priority Mail Express International shipping since insurance is offered free for up to $200 for these services. If I ship a Chromebook that costs $239 to Canada for example, I personally wouldn’t think much about insuring the package. But if I ship my gaming laptop which costs $1,700, I wouldn’t hesitate to pay an additional $28.20 to cover possible loss or damage. Although most international shipments end up being delivered without incident, I still think the extra 28 bucks is worth it. The Postal Service could make a better attempt to promote the value of purchasing additional insurance, but it would not necessarily mean it would have a positive effect on the bottom-line (total loss). In order for Postal Service to reduce international indemnity related costs, it needs strong relationships and service standards agreements with the 190+ national postal operators around the world. And this is for outbound international mail in which insurance claim payments are rendered to U.S postal customers. The Postal Service is also liable for payments to other international postal operators for items lost as inbound mail. Aside from the obvious service improvements such as accurate delivery/attempts and scanning, there is room for improvement. A good place to start would be to remove the automatic system-generated scan indicating arrival at the International Service Centers for all the items listed in the dispatch manifest (as opposed to actually “physically” arriving at the ISC). Implementing item-level processing at entry point and automatically generating verification notes for those items that “are not” in the receptacle would prevent unnecessary loss of revenue. Add the fact that Postal HQ already has the working technical infrastructure already in use (and would require little investment from USPS) this makes it a viable solution to save on indemnity costs. But of course, there are some in the Postal Service who believe that monitoring inbound dispatches and individual items is better done manually with clipboards and paper sheets. For some, it is easier reducing costs by increasing workloads or removing job assignments rather than striving to create an efficient international mail acceptance network with tools USPS already possesses. But yes, I definitely think purchasing additional international insurance is worth it when shipping more valuable tangible items.

    Sep 21, 2019