22 COMMENT

LATAMIR

In the 1980s, robbery of cargo in Brazil increased substantially, largely due to fraud caused by drivers who gave cargo to thieves

in exchange for money.As a result, insurers and local risk

management vendors began to more closely analyse driver backgrounds, including commercial and bank history and criminal records, an action which led to a 50% decrease in robberies in that period.

By the end of the 1990s, however, cargo theft rates were growing again, this time as a result of typical hijacking. This saw a range of new tools being added to risk management programmes for customers, including, but not limited to:

• A loss prevention programme (duly signed by transporter, shipper and insurer)

• Route analysis and nominated secure parking places on the main routes/risk routes

• The installation of a GPS tracking satellite system on valuable cargoes

• The inclusion of the same loss prevention terms from the loss prevention programme in wording clause for each inland policy contains, signed by all parties.

During this period, a number of insurers started to include these rules

in their wording policies as security recommendations.

During the middle of this decade, the high loss ratios of the local market meant that insurers were being forced to include loss prevention programmes in wording clauses, which was named as the risk management clause in inland cargo, a move which again resulted in a 50% decrease in losses.

By the mid-2000s, however, criminals had started to learn how to turn off the tracking satellite systems before forcing

drivers to follow their orders. Insurers and vendors, in turn, reacted by enhancing the wording clauses to be more specific in the risk management clauses. Customers, insurers, brokers, vendors and transporters were now following the same process of risk management, and in particular, the wording clauses written in the policy. Such clauses also served to protect customers against damages and accidents.

Nowadays in Brazil, we have more than 200 vendors for risk management cargo protection, and another 50 tracking device manufacturers, though the types of goods that thieves are targeting remain almost the same.

Risk management clauses have substantially helped insurers to have sufficient capacity to act on risks when that would not have been possible in the past, as well as helping customers to understand that security and the protection of cargo care is an important part of the delivery service.

Today, we are seeing some losses in other countries in Latin America, such as the Colombian, Venezuelan and Mexican markets, which could be avoided if similar programmes and specific rules in wording clauses were enacted. Hopefully, local risk managers will follow Brazil’s example and start to implement similar clauses to protect their business continuity and best practices. ■

CARGO THEFT PREVENTION IN BRAZILLuis Vitiritti, marine risk consultant, Latin America at Zurich, outlines the development of risk management clauses for inland cargo insurance in Brazil

Nowadays in Brazil, we have more than 200 vendors for risk management cargo protection”

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022_LIR10_Comment.indd 22 25/07/2012 15:51