Insurance Doesn’t Make You Whole

After a significant loss, one of the first things people tend to ask is whether it was insured. It's an important question, but it isn't the only one.

If a load of product is stolen, insurance may cover some or all of the value of that shipment. What it doesn't necessarily give you back is the product. That matters when the inventory was already committed to a customer, when replacement inventory isn't readily available, or when the product was intended for a particular selling season.

Then there are the costs that are harder to put on a claim.

What did the disruption do to the customer relationship? Were sales lost? Did insurance costs increase? What happens to your brand when stolen product enters an unauthorized market?And there's another problem companies don't always think about: you may eventually find yourself competing against your own merchandise.

Cargo theft today isn't necessarily someone seeing an unattended truck and deciding to take it. Organized groups can be sophisticated. They understand transportation, distribution and how to move stolen goods back into the marketplace.

That's why I don't think you can look at the value of the stolen product and call that the value of the loss. Insurance can reimburse a loss, but it can't undo everything the loss set in motion.

Consider This

The goal isn't simply to insure the loss. It's to reduce the likelihood and the business impact of the loss in the first place.

That means looking beyond the value of the cargo and asking where additional controls can make a difference:

• Identify higher-risk products, routes, facilities and handoff points.

• Use loss and incident data to find patterns rather than treating each theft as an isolated event.

• Review carrier, driver and vendor controls, especially where custody changes hands.

• Build escalation procedures so suspicious activity is recognized and acted on quickly.

• Have a response plan that includes Operations, Legal, customers, insurers and law enforcement before a major loss occurs.

• After an incident, look beyond what happened to why the opportunity existed, then address that vulnerability across the operation.

Insurance should be the last line of defense against a loss, not the security strategy for preventing one.