At the Verisk Insurance Solutions 2013 Risk Symposium next month, Jason Trigg, CEO of the Cardinal Group, and I will discuss cargo and retail theft, the implications for insurers, and how best to prevent those losses. In 2012, transportation and logistics companies reported nearly 1,200 cargo thefts to CargoNet®. And for retailers, shrink remains a significant challenge. Whether a company absorbs those losses or passes them along to the insurer, the incentive to minimize them is significant.
What can you do to help your clients in every link of the supply chain to lower their theft losses? Here are a few ideas:
1. Turn from pressure to incentive: Pressure to reduce theft losses comes in the form of higher insurance premiums and deductibles. That may help offset claim payments, but it's hardly a long-term strategy for customer retention and profitable growth. In fact, it could ultimately lead your client to find a new insurer (or cause you to drop coverage, with the only benefit being a loss reduction). Instead of relying solely on claim history, provide some incentive as well. Many insurers in the United States, for example, offer deductible waivers (usually of up to $10,000) for customers who agree to participate in the loss mitigation programs of CargoNet and National Equipment Register®. The increased odds of recovery offset the risk of the deductible waiver.
2. Stay current with theft trends: Last year, warehouses and distribution centers became the prime spots for cargo theft, accounting for 27 percent of all incidents reported to CargoNet. In 2011, truck stops were the prime spots at 20 percent. That declined to 19 percent in 2012. Learn more in CargoNet's 2012 annual theft report. Gathering that sort of intelligence will help you anticipate shifts in claim patterns and support predictive modeling efforts.
3. Always offer ideas: Help your insureds understand how they can address theft risk proactively. CargoNet has developed a transportation carrier vetting checklist that our member insurers and brokers can share with their clients (for example, retailers and manufacturers). The tool shows red flags quickly, allowing the rapid detection of identity theft and other new schemes.
To learn more about theft prevention best practices for cargo and retail, please join us at the Verisk Insurance Solutions 2013 Risk Symposium in London on June 24. Be sure to attend session 103: Combating Cargo and Retail Crime.