Supply chain risks are a vulnerability for many business clients – and with cargo crime on the increase, brokers must help their insureds to minimise losses by gaining a more in-depth understanding of the landscape.
Disruptions to supply chains accounted for over £55 million worth of goods stolen last year in the UK alone, according to research from The British Standards Institution (BSI), which has paired up with insurer NMU.
NMU revealed the deal this week, which will provide its broker partners with risk management services and insight into the fast-changing risk landscape, including the increasing threat of cargo crime facing businesses.
Data points to a growing problem: TAPA, a European association of security professionals, reported a 10.3% rise in recorded cargo crimes in the EMEA region in 2017 – with total losses exceeding €105 million. Ian Allman, risk control manager at NMU, said the rise in cargo crime was “well documented.”
“Whether the proceeds are being used to fund organised crime or terrorism, it is a major concern for all, therefore having access to this insight for our brokers and clients is invaluable,” he said in a statement.
As a result, brokers can help their clients to install a more robust supply chain risk management plan – with the aim of reducing losses.
Currently, many insurers don’t offer enough to their clients post-loss to help them mitigate future risk, says Courtney Foster, supply chain solutions manager at BSI.
“Often, a claim happens and an insurer will send a surveyor out, write a post-incident investigation report, pay out the claim, provide the report to the client, and then that’s it. There’s no real check as to continuous improvement or how [the client] is going to then fill the gap that caused the loss in the supply chain,” Foster told Insurance Business.
“Post-incident, they aren’t necessarily solving the root cause of why that loss has surfaced or happened,” she said.
In order to do so, insurers and brokers need to equip insureds with knowledge and advice on creating a risk management framework that will address the exposures.
“If you are doing true governance strategic-level work, looking at where the client’s supply chain management program is effective or ineffective, by nature of improving that program and the governance around how you manage and mitigate risk, the idea is that the losses will reduce almost as a side-effect,” Foster said.
At a time where brokers are being squeezed and always looking to add value to clients beyond the transactional, enhanced risk management capability is something they have been pushing for.
“I think general insurers haven’t been great at giving true strategic risk management advice to clients through the broker. The broker is now challenging the insurer to do better,” Foster said. “NMU is really differentiating themselves through us to be able to provide that value-add as the risk management partner.”