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Stock Throughput and Cargo Insurance Adeaa

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					                  Stock Throughput
                 and Cargo Insurance
                            Presented by:
                       Lisa Rodriguez, ARM
                        Area Vice President
           Arthur J. Gallagher Risk Management Services

May 26th, 2009
           AGENDA

What is a Stock Throughput Policy?

Origin of Policy – mid 1970’s

What is covered

Examples in the market
     What is a Stock Throughput Policy?

Definition:
A marine policy that insures high-valued
inventory and the flow of goods from the source
of production to the consumer. It evolved out of
the Manufacturer’s Output Policy in the 1970’s
when manufacturers began to outsource work
to developing countries.
Components:
   Ocean Cargo Insurance
   Inland Transit
   Property/Storage
                 COVERAGE

It integrates transportation, inventory storage,
material handling and packaging as it covers the
repositioning of:
   Raw materials
   Work in progress
   Finished goods
Coverage can be written as either Direct
Insurance, Reinsurance or on a
Master/Controlled Program.
The focus is on Global Infrastructure and Local
Presence from beginning to end.
               COVERAGE TERMS

Goods in transit world wide – ocean/air/inland

Stock – Raw Materials, “work in progress” &
 Finished Goods

All locations – including at insured’s locations,
 sub-contractors, consolidators, warehousemen
    Includes cover at manufacturing locations
    Subject to process clause
                   FLEXIBILITY
The policy provides the flexibility to choose
between different channels which is a key enabler
for creating a strong, cost-effective supply chain
model.
    Full Container Loads (FCL)
    Consolidation
    Special handling services
    Less than Container Loads (LCL) and Multi-
     Country Consolidation programs
    Sea/Air and Air/Sea programs
    Sea to Air conversions
    Cross-docking, trans-loading, De-Containerizing
     (DC) by-pass and direct to store programs
    Export and import distribution centres
           Typical Coverage for Movable Assets
Export


         Suppliers                                 Warehouse /           Final
         Insurance?                                DC Facilities         Destination




 Local
Property                     Ocean Marine Policy              Inland Transit Policy
 Policy

                                                     Local Property
                                                     Policy

Domestic

           Suppliers               Final
           Insurance?              Destination




 Local
Property                Inland Transit Policy
 Policy
            Stock Through Put Program
Export


                                            Warehouse /     Final
                                            DC Facilities   Destination




                     Stock Trough Put – Seamless




Domestic

                         Final
                         Destination




    Stock Trough Put – Seamless
 Who should consider a Stock Throughput?

Any business with high volumes of inventory held
in warehouses with moderate to high
transportation exposures. Such as:
   Manufacturers
   Distributors (wholesale and retail)
   Exporters/Importers
   Logistics Services Providers
   Warehouse/Storage Companies
   Transportation Companies
          One Insurance Policy Covers
    All Transportation & Storage Exposures

                   Integrated logistics solutions

                   Import and export
               Warehousing and distribution
               Supply chain development
            End-to-end supply chain visibility

                             Export    +
                           Documents         Import
         Inland                            Documents
Origin              Storage Customs                           Inland
         Transit                            Customs Storage   Transit   Destination
               ADVANTAGES
Menu Driven – coverage can be tailored to
 the client’s needs
Broader terms and premium savings over
 property markets/manuscript form
Coverage for earthquake, flood and
 windstorm
Lower deductibles
Seamless coverage – “cradle to grave”
Greater capacity – limits up to $250MM
Combined with property policy can lower
 deductibles, create/protect capacity and
 increase catastrophe coverage.
Profit Sharing Commissions
             DISADVANTAGES

No standard forms – everything must be
 negotiated (nothing can be assumed)

Must coordinate with property
 underwriters

Premium credit under property policy can
 be insufficient to off-set price of STP policy
              MARKETS
AJG Lloyd’s Facility
London / European Underwriters
AIU
Starr Indemnity
ACE
FM Global
US Domestic Underwriters
     Navigator's
     Chubb
     Liberty Mutual
     Fireman’s Fund
     Travellers
     Many others
                                        $ Millions

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               UNDERWRITING

 Need C.O.P.E. information
     Construction type and Area of the facility
     Occupancy
     Protections and security measures
     Exposure – description of values at risk
Transit values – annual volumes split Inland /
 Overseas (average and maximum/turnover)
Stock values – Schedule
Annual sales
Three / Five year Losses for transit and stock
                 RATING
Usually one rate on overall sales

Annual premiums based on projected
 sales

Annual adjustments based on actual sales

Profit Sharing Commissions range from
 5% to 25% of policy premium
                    EXAMPLES
Agricultural or Wine Manufacture and
 Distribution
   Will not include the harvest, but can begin with “goods in
    process” until point of sale
Leather goods manufacturing and
 distribution
   Will not include livestock, but can begin with “goods in
    process” until point of sale
Electronics’ Importing and distribution
   Warehouse to warehouse including customs, land/air and
    or ocean voyages
   Warehouse to retail clients
  Q&A

Thank you

				
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