Are agents, MGA's and insurance companies paranoid about market conditions that operate in the trucking space? The answer is yes and you can see why based on the abridged article from Transport Topics below:
Increased competition is driving down insurance rates and forcing providers to offer broader coverage to transportation firms, according to interviews with industry specialists and new surveys.
Insurers also are seeking new ways to package their offerings to cover a growing list of transportation and logistics services.
Insurance rates have been declining for several years, but new surveys indicate that competition has intensified recently as more insurers have entered the market.
Three out of four insurance brokers and underwriters surveyed by NIP Group Inc., Woodbridge, N.J., said premiums charged for trucking policies continued to decline in the fourth quarter of 2009 and were “intensifying” after earlier
surveys had suggested a firming of insurance rates.
Overall commercial property and casualty premiums fell about 6% in the third and fourth quarters of 2009, according to a market index survey published by the Council of Insurance Agents & Brokers.
The soft insurance market is allowing fleets to negotiate better deals.
One insurer, for example, agreed to amend its liability policies to include the cost of a replacement vehicle with no increase in premium, The prospect of lower premiums gives motor carriers the option of securing more coverage for the same rate or
paring back coverage and pocketing even more savings.
A lot of companies trucking exposures have decreased because they are driving fewer miles, or they have a smaller payroll and fewer power units.
As carriers move further into freight management, they face new and different risks.
Carriers may be held liable for lost sales or extraordinary expenses, for instance, if a shipment does not arrive on time or is lost or damaged. A major issue of concern for insurers is how to cover the activity of brokers and third-party logistics companies.
Let's see if the insanity continues....
Tuesday, March 30, 2010
33,963 is the number of US Traffic Deaths in 2009
Source: DOT
The number of U.S. traffic fatalities reported at the end of 2009,
which was the lowest level since 1954. According to the U.S.
Department of Transportation, the number is 8.9 percent below the
37,261 deaths reported in 2008 and translates to a fatality of 1.16 fatalities
per 100 million miles traveled.
This should lower loss ratios and lead to further softening in the insurance marketplace. It would be interesting to see if trucking insurance carriers could carve out the fatalities they have had per 100 million miles traveled.
The number of U.S. traffic fatalities reported at the end of 2009,
which was the lowest level since 1954. According to the U.S.
Department of Transportation, the number is 8.9 percent below the
37,261 deaths reported in 2008 and translates to a fatality of 1.16 fatalities
per 100 million miles traveled.
This should lower loss ratios and lead to further softening in the insurance marketplace. It would be interesting to see if trucking insurance carriers could carve out the fatalities they have had per 100 million miles traveled.
Sunday, March 21, 2010
Phamaceutical Thefts- Thefts to Order
The $75 Million Pharmaceutical Heist
How common are stolen prescription drugs, and where does the contraband resurface?
In a widely reported incident, thieves broke into Eli Lilly and Co.'s Enfield, Conn., warehouse last Sunday and made away with about $75 million worth of antidepressant pills and other prescription drugs. The thieves waged a high-tech assault on the warehouse, cutting a hole in the roof and rappelling inside, where they disabled the alarms and removed enough drugs to fill at least one tractor-trailer—tactics more reminiscent of Hollywood action-adventure movies than newspaper headlines. The incident, believed to be one of the largest prescription-drug heists ever, is currently being investigated by the FBI and local law enforcement, although no suspects have yet been identified. The case captured national attention in part due to its audacity and scope, but also due to the unlikely target. Since when have prescription drugs been the target of master criminals? NEWSWEEK's Ian Yarett spoke to Dan Burges, the director of intelligence at FreightWatch International, a security firm that tracks cargo theft, to get more context on these kinds of crimes.
How frequently do prescription-drug heists occur?
In the early part of the last decade, there was some pharmaceutical theft going on, but there wasn't a lot of attention placed on it. But in 2005 and 2006, it really took off. We reported 35 pharmaceutical thefts in 2007, and 46 each in 2008 and 2009. Thefts from trucks are most common; only three of the 2009 incidents were warehouse thefts. There have been 10 pharmaceutical thefts thus far in 2010, including the most recent Eli Lilly one.
What does this amount to in the grand scheme of things?
Well, 46 total pharmaceutical cargo thefts aren't a huge number compared to, say, electronics thefts, which might occur 150 times over the course of a year. In our database, pharmaceutical thefts made up only about 5 percent of the total volume of theft incidents in 2009. But in terms of monetary value, pharmaceutical theft is astronomical. Cargo theft in the pharmaceutical industry in 2009 amounted to an average of $4 million per loss. The only thing that even comes close to that is the cell-phone industry, which averaged just over $2 million per loss.
Where do the stolen drugs generally end up?
In the United States, the most common route is down to South Florida, the Miami-Dade area. Then, drugs are shipped to Latin America, or sometimes Asia, often for sale on the black market and/or for counterfeiting purposes. There have also been reports of product being repackaged and reintroduced into the U.S. market or into other areas. In other cases, drugs are sold directly in the U.S. market, typically through nefarious online retailers. But I think it's pretty unlikely that a U.S. hospital or pharmacy would acquire stolen pharmaceuticals.
Does this kind of prescription-drug theft happen as frequently in other countries, especially ones with cheaper prescription drugs?
Drug-cargo thefts are common in Latin America, Brazil, Argentina, and Mexico, maybe not quite to the extent we see in the U.S., but still quite common. In Europe, historically, this is far less common, especially since so many prescription drugs are very cheap or free, although we have been beginning to hear more reports of drug theft in Western Europe, primarily with stolen goods being moved east.
Which places have the biggest black markets?
I think the default answer to that is Latin America, looking at Brazil, Colombia, Central America, Argentina, etc. Costa Rica is actually pretty notorious for black-market products, [including but not limited to] pharmaceuticals.
How do thieves decide which drugs to steal? What's worth the most on the black market?
Cargo theft in the United States is by and large a theft-to-order type scenario. There are people who make their living brokering loads of stolen goods—often we see that thieves have a buyer lined up, or potentially have even sold pharmaceuticals or other goods before they've even been stolen. These cargo-theft gangs do research, find out where a particular product is being manufactured or distributed from, dispatch a team to that location to conduct surveillance, and then either steal the goods on the road from trucks or, as in this recent case, from the warehouse. A few years ago, it was a bit more potluck—thieves would kind of hang out at truck stops, steal whatever they could, and then determine whether or not they could sell it. Whereas now, they steal what's popular, because then they're going to be able to sell it to the consumer for a cheaper price and ultimately make money off it.
Historically, are stolen drugs ever recovered by the manufacturers?
Last year, of the 15 or so pharmaceutical thefts that were over a certain [monetary] benchmark ... some of the drugs were ultimately recovered in more than 80 percent of the cases, through various law-enforcement techniques, like undercover buybacks.
What happens to recovered drugs? Are they considered safe for distribution, given that they could have been tampered with?
Almost exclusively they are destroyed. And that magnifies the economic impact of pharmaceutical theft—if a pharmaceutical company produces a particular product of a particular lot number, often the FDA requires that they recall and destroy all of that lot number, even from shipments that weren't stolen.
http://www.newsweek.com/id/235071
How common are stolen prescription drugs, and where does the contraband resurface?
In a widely reported incident, thieves broke into Eli Lilly and Co.'s Enfield, Conn., warehouse last Sunday and made away with about $75 million worth of antidepressant pills and other prescription drugs. The thieves waged a high-tech assault on the warehouse, cutting a hole in the roof and rappelling inside, where they disabled the alarms and removed enough drugs to fill at least one tractor-trailer—tactics more reminiscent of Hollywood action-adventure movies than newspaper headlines. The incident, believed to be one of the largest prescription-drug heists ever, is currently being investigated by the FBI and local law enforcement, although no suspects have yet been identified. The case captured national attention in part due to its audacity and scope, but also due to the unlikely target. Since when have prescription drugs been the target of master criminals? NEWSWEEK's Ian Yarett spoke to Dan Burges, the director of intelligence at FreightWatch International, a security firm that tracks cargo theft, to get more context on these kinds of crimes.
How frequently do prescription-drug heists occur?
In the early part of the last decade, there was some pharmaceutical theft going on, but there wasn't a lot of attention placed on it. But in 2005 and 2006, it really took off. We reported 35 pharmaceutical thefts in 2007, and 46 each in 2008 and 2009. Thefts from trucks are most common; only three of the 2009 incidents were warehouse thefts. There have been 10 pharmaceutical thefts thus far in 2010, including the most recent Eli Lilly one.
What does this amount to in the grand scheme of things?
Well, 46 total pharmaceutical cargo thefts aren't a huge number compared to, say, electronics thefts, which might occur 150 times over the course of a year. In our database, pharmaceutical thefts made up only about 5 percent of the total volume of theft incidents in 2009. But in terms of monetary value, pharmaceutical theft is astronomical. Cargo theft in the pharmaceutical industry in 2009 amounted to an average of $4 million per loss. The only thing that even comes close to that is the cell-phone industry, which averaged just over $2 million per loss.
Where do the stolen drugs generally end up?
In the United States, the most common route is down to South Florida, the Miami-Dade area. Then, drugs are shipped to Latin America, or sometimes Asia, often for sale on the black market and/or for counterfeiting purposes. There have also been reports of product being repackaged and reintroduced into the U.S. market or into other areas. In other cases, drugs are sold directly in the U.S. market, typically through nefarious online retailers. But I think it's pretty unlikely that a U.S. hospital or pharmacy would acquire stolen pharmaceuticals.
Does this kind of prescription-drug theft happen as frequently in other countries, especially ones with cheaper prescription drugs?
Drug-cargo thefts are common in Latin America, Brazil, Argentina, and Mexico, maybe not quite to the extent we see in the U.S., but still quite common. In Europe, historically, this is far less common, especially since so many prescription drugs are very cheap or free, although we have been beginning to hear more reports of drug theft in Western Europe, primarily with stolen goods being moved east.
Which places have the biggest black markets?
I think the default answer to that is Latin America, looking at Brazil, Colombia, Central America, Argentina, etc. Costa Rica is actually pretty notorious for black-market products, [including but not limited to] pharmaceuticals.
How do thieves decide which drugs to steal? What's worth the most on the black market?
Cargo theft in the United States is by and large a theft-to-order type scenario. There are people who make their living brokering loads of stolen goods—often we see that thieves have a buyer lined up, or potentially have even sold pharmaceuticals or other goods before they've even been stolen. These cargo-theft gangs do research, find out where a particular product is being manufactured or distributed from, dispatch a team to that location to conduct surveillance, and then either steal the goods on the road from trucks or, as in this recent case, from the warehouse. A few years ago, it was a bit more potluck—thieves would kind of hang out at truck stops, steal whatever they could, and then determine whether or not they could sell it. Whereas now, they steal what's popular, because then they're going to be able to sell it to the consumer for a cheaper price and ultimately make money off it.
Historically, are stolen drugs ever recovered by the manufacturers?
Last year, of the 15 or so pharmaceutical thefts that were over a certain [monetary] benchmark ... some of the drugs were ultimately recovered in more than 80 percent of the cases, through various law-enforcement techniques, like undercover buybacks.
What happens to recovered drugs? Are they considered safe for distribution, given that they could have been tampered with?
Almost exclusively they are destroyed. And that magnifies the economic impact of pharmaceutical theft—if a pharmaceutical company produces a particular product of a particular lot number, often the FDA requires that they recall and destroy all of that lot number, even from shipments that weren't stolen.
http://www.newsweek.com/id/235071
Wednesday, March 10, 2010
Mitigating Cargo Claims When A Load is Rejected- A Transportation Attorney's Perspective
From Big Truck TV
Henry Seaton is another pro in the business- a very fine transportation attorney. Although I don't know him personally, I have seen his fine work helping truckers in figuring out how to handle everything from cargo claims, contract language, and insurance legalese.
Note that there are a lot of cases where rejected loads are not covered from an insurance standpoint. First and foremost, an insurance carrier will look to see if there is actual physical loss or damage and if it is, how the claim happened. Spoilage is a common exclusion under the MTC form.
Henry's point of view(edited):
If you are going to mitigate a cargo claim, you need to do it within the first 24 hours of rejection. What we recommend to our clients is, the minute that shipment is rejected, go upstream and get out what is called an on-hand notice. An on-hand notice is a notice from you, the carrier, to the consignee, the consignor and the broker that says you have their load, it’s been wrongfully rejected, you’re going to put it in a warehouse and get it inspected – they need to come and tell you ho to mitigate the damages or its going to be sold; and if it’s sold and brings a distressed market price, that’s not the fair market price – that’s simply the price that it brought because the shipper never put it through the chain of commerce in the ordinary way. So, you issue your on-hand notice and you immediately get the product inspected.
I’ve even gone to the point of advocating that drivers carry digital cameras that have a time and date stamp on it so that when the shipment is rejected the driver can take pictures of the product in the trailer because six months after the fact a notice on the bill of lading that says, Rejected – Wet, doesn’t begin to show to what extent the product was wet. It may very well be the shipper left the doors open and the back two skids of the ice cream shipment melted in the hot Memphis sun and there’s nothing wrong with the product. Documenting the condition of the product at the time of rejection, getting it into proper temperature control and doing all that within the first 24 hours is an important way to resolve the claim.
Also, you have to realize that most motor carriers attempt to insure against that loss by having a policy of insurance. If they have the proper insurance, the insurance company will move in and take over the adjustment. But it’s a sad reality of the refrigerated industry that a lot of the policies are not all-encompassing; they may not even have reefer breakdown insurance, but the policy they do have may be limited to reefer breakdown, which means the shipment is rejected because the product is “hot”. The carrier is liable for the claim but the insurance company says the reefer was working fine so they’re not going to cover the claim. If the insurance company doesn’t have any skin in the game, they won’t be interested in helping the carrier mitigate the damages. And sometimes, with insurance companies that don’t specialize in refrigerated product, they’ll send in an adjuster who wouldn’t know whether tofu was fit for consumption or not and all they can do is a visual inspection, which isn’t worth much if you want to fight the claim.
Henry Seaton is another pro in the business- a very fine transportation attorney. Although I don't know him personally, I have seen his fine work helping truckers in figuring out how to handle everything from cargo claims, contract language, and insurance legalese.
Note that there are a lot of cases where rejected loads are not covered from an insurance standpoint. First and foremost, an insurance carrier will look to see if there is actual physical loss or damage and if it is, how the claim happened. Spoilage is a common exclusion under the MTC form.
Henry's point of view(edited):
If you are going to mitigate a cargo claim, you need to do it within the first 24 hours of rejection. What we recommend to our clients is, the minute that shipment is rejected, go upstream and get out what is called an on-hand notice. An on-hand notice is a notice from you, the carrier, to the consignee, the consignor and the broker that says you have their load, it’s been wrongfully rejected, you’re going to put it in a warehouse and get it inspected – they need to come and tell you ho to mitigate the damages or its going to be sold; and if it’s sold and brings a distressed market price, that’s not the fair market price – that’s simply the price that it brought because the shipper never put it through the chain of commerce in the ordinary way. So, you issue your on-hand notice and you immediately get the product inspected.
I’ve even gone to the point of advocating that drivers carry digital cameras that have a time and date stamp on it so that when the shipment is rejected the driver can take pictures of the product in the trailer because six months after the fact a notice on the bill of lading that says, Rejected – Wet, doesn’t begin to show to what extent the product was wet. It may very well be the shipper left the doors open and the back two skids of the ice cream shipment melted in the hot Memphis sun and there’s nothing wrong with the product. Documenting the condition of the product at the time of rejection, getting it into proper temperature control and doing all that within the first 24 hours is an important way to resolve the claim.
Also, you have to realize that most motor carriers attempt to insure against that loss by having a policy of insurance. If they have the proper insurance, the insurance company will move in and take over the adjustment. But it’s a sad reality of the refrigerated industry that a lot of the policies are not all-encompassing; they may not even have reefer breakdown insurance, but the policy they do have may be limited to reefer breakdown, which means the shipment is rejected because the product is “hot”. The carrier is liable for the claim but the insurance company says the reefer was working fine so they’re not going to cover the claim. If the insurance company doesn’t have any skin in the game, they won’t be interested in helping the carrier mitigate the damages. And sometimes, with insurance companies that don’t specialize in refrigerated product, they’ll send in an adjuster who wouldn’t know whether tofu was fit for consumption or not and all they can do is a visual inspection, which isn’t worth much if you want to fight the claim.
Monday, March 1, 2010
March 2010- Various Topics- Cargo Theft, Delay Exposure, Trucking Bankruptcies & TWIC Cards
Jean Gardner at CAB ( Central Analysis Bureau) is a pro in our business. She and CAB do a very nice monthly newsletter. Here are some items I think are worthy of mention:
1)CARGO THEFT - The Wall Street Journal reported that over 5 days in January, a truck load of consumer electronics, a truck load of paper and a truckload of chairs were stolen. Accordingly to FreightWatch, $487 million in goods were stolen in 2009, a 67% increase over the last year. That involved 859 truckloads of goods. That is a lot of cargo being taken. With economic conditions still not good, cargo theft is likely to continue to rise, with professionals and amateurs taking a stab at the crime. Rest stop thefts are reportedly the largest group so pay attention to where your carrier is operating and whether he will need to park trailers at rest stops.
( editors note: cargo theft data is all over the map and the industry is working to get better information. My personal thoughts is that this represents only reported goods and I would say there are very substantial cases of underreporting here.)
2)DELAY EXPOSURE - As those in the cargo industry know, Wal-Mart has long led the way in imposing requirements on how, when and where its product will move through the country. If a Wal-Mart imposed obligation ultimately works that obligations then begins to be imposed by many shippers. It is now reported that Wal-Mart has implemented penalties for shipments which are not delivered within its required deadline, which allows for a 4 day window for delivery. While most cargo policies exclude damages caused by delay, this is an additional exposure to a motor carrier which needs to be considered. ( editors note: delay is a common exclusion under every motor truck cargo form. Look for the industry to be asked to include coverage for delay.)
3)TRUCKING BANKRUPTCIES - Avondale Partners has released its report on the 4th quarter study of trucking bankruptcies. 445 fleets failed in the 4th quarter. A total of 21,010 trucks came off the road, more than double what was lost in 2008. Avondale indicates that they do not expect the first quarter of this year to be any better as fleets which fought hard to stay afloat are simply losing the momentum needed to stay alive.
4)TWIC CARDS - For those of you unfamiliar with this term, a TWIC is a transportation worker identification credential card. Over 1.5 billion have been issued thus far and the number is growing. The card, which is issued by the TSA, verifies the driver and is required in many pier and airport trucking operations. It is taking on added use as shippers seek to require those cards as evidence of a driver’s identity when picking up a shipment. Is this information which an underwriter would consider in evaluating the motor carrier’s exposure? Presumably, the more drivers who have been vetted by the TSA the less likelihood there is of cargo theft by drivers and the ever increasing imposter losses. ( editors note: I had never heard of TWIC. This is one step before having a national driver card which makes sense for our industry).
Have a great March.
1)CARGO THEFT - The Wall Street Journal reported that over 5 days in January, a truck load of consumer electronics, a truck load of paper and a truckload of chairs were stolen. Accordingly to FreightWatch, $487 million in goods were stolen in 2009, a 67% increase over the last year. That involved 859 truckloads of goods. That is a lot of cargo being taken. With economic conditions still not good, cargo theft is likely to continue to rise, with professionals and amateurs taking a stab at the crime. Rest stop thefts are reportedly the largest group so pay attention to where your carrier is operating and whether he will need to park trailers at rest stops.
( editors note: cargo theft data is all over the map and the industry is working to get better information. My personal thoughts is that this represents only reported goods and I would say there are very substantial cases of underreporting here.)
2)DELAY EXPOSURE - As those in the cargo industry know, Wal-Mart has long led the way in imposing requirements on how, when and where its product will move through the country. If a Wal-Mart imposed obligation ultimately works that obligations then begins to be imposed by many shippers. It is now reported that Wal-Mart has implemented penalties for shipments which are not delivered within its required deadline, which allows for a 4 day window for delivery. While most cargo policies exclude damages caused by delay, this is an additional exposure to a motor carrier which needs to be considered. ( editors note: delay is a common exclusion under every motor truck cargo form. Look for the industry to be asked to include coverage for delay.)
3)TRUCKING BANKRUPTCIES - Avondale Partners has released its report on the 4th quarter study of trucking bankruptcies. 445 fleets failed in the 4th quarter. A total of 21,010 trucks came off the road, more than double what was lost in 2008. Avondale indicates that they do not expect the first quarter of this year to be any better as fleets which fought hard to stay afloat are simply losing the momentum needed to stay alive.
4)TWIC CARDS - For those of you unfamiliar with this term, a TWIC is a transportation worker identification credential card. Over 1.5 billion have been issued thus far and the number is growing. The card, which is issued by the TSA, verifies the driver and is required in many pier and airport trucking operations. It is taking on added use as shippers seek to require those cards as evidence of a driver’s identity when picking up a shipment. Is this information which an underwriter would consider in evaluating the motor carrier’s exposure? Presumably, the more drivers who have been vetted by the TSA the less likelihood there is of cargo theft by drivers and the ever increasing imposter losses. ( editors note: I had never heard of TWIC. This is one step before having a national driver card which makes sense for our industry).
Have a great March.
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