Insurance Industry: One Cog in the Cargo Theft Prevention Machine

By | May 19, 2008

Supply chain players advised to combine strategies for a multi-level solution to loss control


While cargo theft can affect every sector of the supply chain, competing interests among the various players in the chain can get in the way of curbing thefts and catching the criminals responsible, according to a loss control specialist.

Barry Tarnef of Chubb Commercial Insurance, specializing in loss control, said the most viable solution lies in all of the supply chain players combining strategies and efforts into a workable multi-level loss control solution. The National Insurance Crime Bureau held a cargo theft summit in April with that goal in mind.

The gathering in Florida allowed insurance representatives, law enforcement professionals, trucking companies, state representatives and federal legislators to meet and exchange strategies and tactics to help protect the nation’s transportation industry.

Robert M. “Bear” Bryant, president and CEO of the National Insurance Crime Bureau, and Marion County, Fla., Sheriff Ed Dean, co-chairman of the National Cargo Theft Task Force co-hosted the summit.

Tarnef specified five individual entities that make up the supply chain: shipper (manufacturers, marketers); transport providers (carriers); terminal operator (cargo container lay-over location); insurers; and governmental bodies.

Tarnef cited an example where loss control practices of one supply chain component could adversely affect the entire process: A shipper’s goal is speed to market. If cargo is due at 9 a.m. on a Monday in Jacksonville, Fla., originating in Savannah, Ga., the transporter needs to pick up on the prior Friday night. While the shipper has fulfilled his end of the deal, the carrier has potentially placed the cargo at risk, depending on the level of security at the temporary storage location over the weekend.

“Fifty percent of loss occurs on weekends at unsecured or improperly secured locations,” Tarnef said. “The shipper made his objective, but also put the cargo in jeopardy in the process, potentially compromising the remainder of the supply chain. Cargo at rest is cargo at risk.”

Tarnef advocates an initiative similar to one the European Union implemented, designed to meet high security needs for supply chain loss control. There is really no plan in the United States for cargo to park and be safe; no national objective, Tarnef said.

Many thefts occur when loads are subcontracted, Tarnef noted. He said insurers can offer lower deductibles or higher limits as incentives to companies that put effective security measures in place. Progress may be attained by differentiating trucking companies and “rewarding the good ones” or imposing exclusions if trucks are left unattended or unlocked, he added.

“I don’t think cargo theft is getting its fair share of attention. I would like to see the government make cargo theft a priority,” Tarnef said.

Cargo Theft Security Breaches

On average, numbers of cargo security breaches are not going down, Tarnef reported.

“There have been successes on an individual company basis,” Tarnef said. “But cargo criminals are moving targets. If enforcement is increased in one area, they move to areas where enforcement is less established.”

Solid numbers that quantify the cargo theft problem and could be used to justify more intervention by law enforcement and government are hard to come by, Tarnef said.

Bryant and Dean said cargo thieves associated with organized crime networks have taken their operations to a new level, threatening the safety of citizens. Those who once targeted high-dollar items such as electronics, clothing, cigarettes, sport items and frozen foods have now advanced to stealing pharmaceuticals worth as much as $100 million per trailer load, the pair reported.

Many of these drugs are being sold on the black market with little attention paid to the fact that they must be stored under specific temperatures. In addition, authorities believe some of these commercial vehicles have been linked to terrorism in the United States and abroad.

The cargo theft security summit focused on a national strategy to thwart cargo theft as well as generate Congressional support. Parts of the national strategy have already been approved by Congress.

The NICB agrees that no individual organization or agency has the resources to single-handedly stop cargo criminals. The organization believes that by joining with the combined resources and expertise of thousands of insurers, law enforcement agencies and state fraud bureaus, insurance fraud can be detected, deterred and stopped.

Tarnef said insurers can contribute by using the available information to alert clients on criminal trends in a timely manner, to advise them to be aware of criminal activity, and to take steps in their areas.

“Information is used as a preventive tool,” he said.

Topics Fraud Market Trucking

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal Magazine May 19, 2008
May 19, 2008
Insurance Journal Magazine

Worker’s Comp Report with Directory; Restaurants/ Bars/ Liquor; Inland Marine/ Transportation/ Cargo