One of Canada’s largest brokerages has taken a step to help its clients manage the risk of cargo and heavy equipment theft.
Marsh Canada has joined with CargoNet and the National Equipment Register (NER) to help insureds in Canada prevent cargo and heavy equipment theft and improve theft recovery rates.
As a result of the collaboration, Marsh’s clients will have access to CargoNet and NER’s data sets analytical tools, which they can use to detect theft trends and support loss prevention activities. CargoNet and NER are divisions of Verisk Crime Analytics, a unit of Verisk Analytics.
The Canadian Trucking Association issued a report in 2011, sponsored by several insurers, estimating that cargo crime in Canada amounts to approximately $5 billion a year.
“Theft is a problem in North America and globally with respect to cargo,” said Matthew Yeshin, managing director at Marsh Canada Ltd. “And while nothing is going to cure theft as a global problem, it is important for brokers to ensure that their clients’ cargo is not going to be targeted.”
Insurers in Canada such as
Allianz and
Zurich have formed similar alliances with Verisk Crime Analytics. Yeshin said organizations like CargoNet are a useful resource for brokers because of their experience in identifying patterns in cargo and heavy machinery theft.
“They are a good resource to help identify where claims are starting, or where problems are potentially emerging, which means that we can be quicker to work with our clients in terms of identifying what is going to be a problematic cargo,” he said. “This is rather than waiting until underwriters have determined a certain commodity is problematic.”
Working with theft analytics early can help brokers advise clients on managing security around shipments. This reduces the chance of clients being the target of theft; in turn, this will lessen the chance of insurers asking brokers’ clients to pay higher deductibles for insuring particular items identified as more susceptible to theft.
The laws of supply and demand in the marketplace will dictate thieves’ interest in particular commodities, said David Shillingford, president of Verisk Crime Analytics.
“Something very unusual will have a limited market, and therefore be much harder for a thief to sell, compared to stealing something that is extremely commonplace, like a generator or a roll of copper wire that doesn’t have a serial number on it,” he said. “If the price of copper goes up and the supply of copper has gone down, then you have higher prices, a greater demand, people are going to buy, so people are going to be more likely to steal it because there is a ready market for it.”
Currently, pharmaceuticals, copper wire and food are on the radar as targets for cargo theft. A stolen crane – or imported parts stolen from a crane – can hold up builders’ projects for days until either repairs are done or a new crane is delivered to the worksite.
Shillingford added that the value of the goods stolen is often outweighed by the damage a theft causes to relationships throughout the supply chain. A random theft does not necessarily mean a company has a security issue, although this is often the impression people have, he said. Companies are often left battling the perception.
“The relationship between the manufacturer and the retailer is damaged if something is stolen in the supply chain,” said Shillingford. “But worse than that, the person who is responsible for getting there, his relationship with either the manufacturer or the retailer, or both, is damaged and sometimes irreparable.
“If someone can lose a client as a result of a theft, that is what keeps people up at night. That’s a risk that is probably not insured.”
