In our previous article we looked at some of the top trends in cargo theft and how they impact the economy. The lack of centralized reporting on cargo theft means we don’t have solid data on a national level, but it does appear that cargo theft is increasing. While there has been an increase in claims across the industry, Northbridge Insurance has seen a downward trend since claims peaked in 2008. Here are some of our observations on cargo theft:
Higher cargo theft claim amount
Despite a decrease in overall cargo theft claims, our average claim amount has fluctuated over the past five years. “The increase in the average amount for claims can be attributed to an increase in the value of goods being transported and better targeting by sophisticated criminals for specific types of cargo. A transport truck will often be hauling between $200,000 and $250,000 of cargo, however settlement criteria, carriage agreements and high deductibles translate this into lower settlement amounts. This may have a negative impact on carriers and shippers as they may end up paying more out of pocket” said Evan Di Bella, our National Director of Claims Business Support.
To mitigate the risks of cargo theft, our Risk Services team has worked closely with our trucking customers to ensure they take appropriate risk management measures to help prevent theft. Identifying cargo theft hot zones, routes and other factors have helped our customers take steps to improve cargo security.
Location and time of day matter
Some places and times are higher risk than others; for instance, Ontario and Quebec have been identified as the riskiest provinces, especially major cities like Montreal and the Greater Toronto Area. Most cargo loss incidents happen between Friday and Monday. Ten years of data shows that Monday has historically been the riskiest day, with nearly 40% more thefts than any other day of the week. Holiday weekends also see a dramatic spike in reports of cargo theft.
The type of cargo also produces different risks, as different regions see higher rates of theft for specific goods, according to data compiled by SensiGuard Supply Chain Intelligence Center. For example, the Greater Toronto Area has high incidents of theft for automobiles and parts. Across Canada food and drink cargo make up more than a third of all thefts, due to the ease of reselling to merchants who may not be aware they are purchasing stolen goods.
Importance of strong underwriting guidelines and cargo theft education
Evan Di Bella, our National Director of Claims Business Support says, “We have seen a decrease in the amount of cargo theft over the last three years at Northbridge Insurance, mostly driven by a multi-faceted approach that appears to be working. Essentially, better underwriting guidelines, education with industry groups, higher awareness and improved recovery due to better police involvement/claims handling practices are definitely helping us lessen the impact on us and our customers. Unfortunately, the opposite trend is happening across the industry.”
It’s important for insurance companies to look at historic claims information and industry trends to help inform their underwriting guidelines. Understanding the key variables, asking the right questions about cargo type, route, risk management practices and identifying trends can help ensure that underwriters are working to minimize losses for customers.
Todd MacGillivray, our Director of Transportation and Logistics says, “Our biggest strength is our extensive experience providing coverage for our trucking customers. Our underwriting guidelines are informed by examining comprehensive sets of data that allows us to create a strategic approach. First, we get back-to-basics by asking our customers simple questions about where the cargo is going, what the cargo is and the level of commitment they have towards safety and hazard management. Then we work closely with our brokers so we can have a collaborative approach in the event of a challenging issue. Great underwriting, strong broker support and experienced trucking claims specialists, combined with our unmatched risk services is how we’re able to deliver on our industry leading approach.”
Stay tuned to our blog throughout 2016 as we look at trends that affect our customers and how we implement best practices for risk management.