Delivering the goods

Goods in transit are an attractive target for thieves. Last month, robbers posing as members of staff hijacked a Sainsbury's lorry delivering to a store in south London. The thieves made off with £150,000 worth of cigarettes, alcohol, phonecards and sweets.

In 2000, more than £100m worth of goods, vehicles and trailers were reported stolen in the UK, according to figures from the Essex Police's stolen lorry load desk. Incidents of theft rose sharply from 2,271 in 1999 to 3,400, and the number of hijacking incidents also jumped to 79 from 51.

In some cases, the companies whose goods have been stolen will manage to claim the value back from the hauliers but, to be on the safe side, they could have looked into getting marine cargo insurance. Although the name suggests containers piled high on ships ploughing across oceans, policies also cover goods travelling by road and air.

Honing in on phones
Mobile phones are a particular favourite among those looking to relieve hauliers of their cargo. London underwriting manager for insurers CNA Maritime, Andrew Coutts, says: "Mobile phones are the bête noire of the UK market. It is very difficult to find insurers that are interested."

Some consignments of mobile phones are now being fitted with electronic tags as part of the government's goods chipping initiative. Nokia is taking part in the pilot scheme, which aims to reduce crime by radio frequency identification systems. Research has shown that 10% of the cost of high-tech consumer goods goes to cover losses in the supply chain.

Jason Gibbons is a director of risk management company Cargo Solutions. He says: "There will always be organisations that aren't particularly risk-aware and that will be because they haven't had any problems."

Gibbons says most hijacks are caused by a lack of information security. He says companies also need to be aware of repetitive practices, such as consignments always leaving the factory at the same time for the same destination.

Cargo Solutions will do a general healthcheck for its clients, looking at specific problems and also examining areas such as security of information, packaging, use of hauliers and transit chains. "The people we have are typically ex-master mariners or people from the industry who have dealt with cargo all their lives," Gibbons says.

A lot of the company's business is within the insurance market says Gibbons, but it is also increasingly working with companies directly, such as pharmaceuticals groups.

Manager of UK marine at Royal & Sunalliance (R&SA), Peter McDermott says companies have become more aware of the importance of security when transporting goods. "There has been a shift in the past 12 months in security awareness, particularly in the high-technology area," he says.

McDermott agrees that there are trends in the favourite type of cargo among thieves. He says in the late 1980s and early 1990s, cigarettes and alcohol were difficult to insure, but when a stringent risk management programme was put in place, these cargoes became harder to steal.

He says attention has now turned to hi-tech shipments: "There was a mass of theft - hijacking-type theft. The insurance industry got burned by these types of losses."

McDermott says this led to a need for a rise in premiums, a rise in self insurance and an increase in the importance of specialist risk management.

High-tech companies found themselves having to implement the same level of security as the alcohol and tobacco companies before them.

Market trends
The market in marine cargo insurance is showing clear signs of hardening, McDermott says and there has been a stronger focus on claims activity. He says reducing the risk of a claim can be done in one of three ways: by excluding the exposure, by charging a premium to cover the exposure or by carrying out marine risk management.

He adds: "If you are a customer, probably the most attractive option is marine risk management. You are paying for something that is going to have a long-term effect."

Gibbons says self-insurance is being looked at by large companies analysing their costs, such as those in the telecoms market. "Big organisations are making alternative decisions," he says.

The marine cargo market is recovering from a bit of a downturn in recent years, McDermott says, when there was too much competition and capacity in the market, and prices dropped. But now, alongside being able to charge higher premiums, the market is looking at adding value for its clients, by helping them manage their risks.

As well as the existence of specific risk management companies, some of the major companies are employing their own risk managers. Insurance companies such as R&SA are also developing their own capability in this area.

All the recent developments aim to make marine cargo easier for brokers to sell and, if UK companies continue to be aware of security, the market should look even healthier in future years.