The theft of construction equipment, tractors and agricultural machinery, trailers and caravans continues to cost insurers millions of pounds each year and yet there is much more that insurers can do to protect themselves and to minimise the costs and maximise the opportunities of equipment recovery.
Equipment thieves in the UK are targeting higher value items of equipment and using the proceeds to fund other criminal activities. The profits from white van man's daily journeys across the Channel with bootlegged alcohol and tobacco continue to provide an attractive and relatively risk-free source of cash for criminals. Despite this, it also seems that the criminals have become more selective in the choice of equipment they steal.
The agricultural market in particular has provided an excellent source of high-value tractors, many of which have been taken to the Republic of Ireland. Often these machines are exported from the UK before the owner is even aware of the theft, let alone reported it to the police, leaving little opportunity for the ports police to seize it as it passes through. The sheer weight of traffic going through Britain's ports means that only limited checks are performed at both the ferry and container ports, leaving the door wide open for criminals. How can insurers help with what appears to be a police problem?
The National Plant & Equipment Register (TER) runs an international database of owned and stolen equipment, and this database is open 24 hours a day for police and law enforcement officers to check equipment. Insurers should be making it a condition of insurance that their clients register all their equipment on TER's database to allow the police the opportunity to check this data and verify ownership details when they are inspecting an item of equipment. Up until several years ago no insurer would insure a client without knowing the details of exactly what they are insuring. These days insurers are simply asking clients for the fleet valuation and insuring them on this basis.
Knowledge pays off
It is possible, in a number of instances, that the client under-values their fleet in order to reduce premiums but will continue to make claims for the full value of their fleet, secure in the knowledge that the insurer doesn't know what they are insuring and so will not be able to dispute any claim.
Knowing the details of an equipment fleet, including the accurate values of individual items, would be of significant benefit when the claims come in. TER has found that many payments made by insurers are way beyond the actual market value of the equipment – part of this may be due to some new for old policies and part due to inflated valuations made after the theft.
TER has also found that insurers are insuring stolen equipment. During an operation with the Devon & Cornwall Constabulary TER recovered 14 items of equipment, one of which had been stolen, paid out for by the insurer, bought after a period of time by another client of the same insurer and insured again by this insurer! TER is convinced that by making the registration of equipment a mandatory part of a policy, further recoveries will be made as these fleet details are logged on TER's database.
The UK has and continues to be a destination for so called “grey” imports. These are machines that have been manufactured outside the EU and imported into the UK outside the dealer network. So what? These machines do not conform to EU Health & Safety standards, the CE marking system, and should be impounded by Health & Safety officers at the ports of entry into the EU. However, just as it is easy for the criminals to export stolen machines, it easy for others to import sub-EU specification standard equipment into the UK. By not conforming to EU standards these machines are presenting a clear liability problem for insurers.
Loss reporting is a vital component in the service that TER provides to the police. The Police National Computer's (PNC) ability to accurately log and then provide equipment theft details for the police is not good. For this reason the police are providing TER with details of all the plant and equipment registered on the PNC so that TER can sort and register the data on TER's own specialist database.
Clearly it is a major problem when a police officer in one county has logged a theft and an officer in another county inspects the stolen equipment but cannot identify it as stolen because the data has been incorrectly registered on the PNC in the first instance. TER believes that this will lead to the outsourcing of all police equipment theft data to TER who will manage the data on behalf of the Police IT Organisation (PITO).
Speed is crucial
It is vital, therefore, that insurers report equipment thefts in a timely and accurate manner so that the data is available for the police to receive an authoritative response from TER. Unfortunately the average time between the date on which the theft occurred and the date on which the theft was reported to TER has increased from 57 days in 1999 to 89 days in 2000. TER believes that this may be due to the continued upheaval in the insurance industry and suggests that insurers make the reporting of thefts to TER a responsibility of their client as a part of the conditions for the payment of a theft claim.
By pushing the responsibility towards the client, the time taken to report thefts should dramatically reduce, thus increasing the opportunities for an early recovery. Loss adjusters do a manful job in reporting losses and it is no fault of theirs that they are often the last party in the chain when they are tasked to adjust a theft and report it to TER. Brokers could certainly play their part. TER also offers insurance claims departments presentations to raise awareness of the theft and reporting issues.
Equipment theft is not solely a UK problem. It is a global issue and hence TER's expansion into Europe and the US. TER is already exchanging theft data with the Dutch authorities and has been tasked by the Belgian construction industry to set up services in Belgium. Most insurers using TER are European, if not global, organisations and TER is encouraging them to report equipment theft claims from their European offices initially, and then from their worldwide offices. By centralising all the theft data TER will be able to successfully extend services to European and then worldwide police and law enforcement agencies.
TER is also working with the banks to log their equipment liens on TER's database. The net result of all these developments is to allow those in the construction, agricultural, haulage and caravan markets the opportunity to check TER's database before buying an item of equipment to check its ownership and finance status. This will make the disposal of stolen equipment harder for the criminal and reduce the amount of stolen equipment in circulation by improving its recovery rate.
With the number of stolen items being exported so rapidly from the UK after their theft, TER is working closely with all UK ports police, HM Customs & Excise and the Special Branch to train officers in equipment identification techniques and to encourage the regular and targeted interception of equipment leaving UK shores.
In a recent initiative TER and the British International Freighting Association (BIFA) are working together to encourage shippers and freight-forwarders to pass to TER the details of equipment which they are exporting to TER so that the ownership and finance status of the equipment can be checked prior to export.
Revealing the tricks
This year TER has uncovered a new technique being used by equipment thieves. In May TER received a pre-purchase due diligence enquiry from Northern Ireland with regard to a John Deere tractor being offered for sale in the Republic of Ireland. TER checked the serial number, which revealed that it was a French number which should have been on a tractor exported from Germany to France in April this year, so what was this tractor doing in Ireland?
TER compared the hours run on the tractor in Ireland with one of the same make and model which was already registered as stolen from Hertfordshire on TER's database. There was a close match. To confirm it, TER checked a further number from the tractor which confirmed its identity as the one registered as stolen – so why did it have a French identity plate?
TER believes that a gang in France and Ireland are at work stealing the plates off tractors in France, sending them to Ireland, where the Irish gang – using the stolen plate as a guise – travel to England, steal the same make and model, remove it to Ireland before the theft has been reported to the police, and restamp and replate it with the stolen French identity before selling it for its full market value in Ireland. It is a lucrative business.
TER has already recovered eight tractors in Ireland this year, each worth more than £20,000 and each of which has been bought for the full market value, insured and, in some cases, financed by Irish insurers and banks. Of these three had French identities and one had an American identity. It would not be unreasonable to assume that these tractors alone had netted this gang more than £150,000, and there are many more that are still out there.