Jewellers Block Insurance and the Pre-‐Risk Survey by pengxiang

VIEWS: 3 PAGES: 29

									Jewellers’	
  Block	
  Insurance	
  and	
  
     the	
  Pre-­‐Risk	
  Survey	
  
  What	
  is	
  Jewellers’	
  Block	
  and	
  who	
  
   might	
  purchase	
  this	
  insurance?	
  

Jewellers’	
   Block	
   Insurance	
   relates	
   to	
   insurance	
   cover	
  
provided	
  for	
  the	
  following:	
  
   •    Retailers	
  
   •    Wholesalers	
  
   •    Manufacturers	
  
   •    Pawnbrokers	
  
   •    Private	
  collectors	
  
     What	
  is	
  a	
  “Pre-­‐Risk	
  Survey”?	
  


A	
   pre-­‐risk	
   survey	
   is	
   a	
   survey	
   commissioned	
   by	
   Insurers/
Underwriters	
   before	
   they	
   agree	
   to	
   accept	
   a	
   risk	
   or	
  
acceptance	
   of	
   a	
   risk	
   may	
   be	
   dependent	
   upon	
   a	
   satisfactory	
  
survey.	
  
The	
   survey	
   is	
   a	
   risk	
   assessment	
   of	
   the	
   Insured’s	
   business	
  
conducted	
  by	
  an	
  independent	
  third	
  party.	
  
              Overview	
  of	
  the	
  Policy	
  


•    Coverage	
  
•    Items	
  insured	
  and	
  sums	
  insured	
  
•    Conditions	
  precedent	
  
•    Exclusions	
  
   What	
  cover	
  is	
  provided	
  to	
  a	
  retail	
  
    jeweller	
  by	
  a	
  typical	
  JB	
  policy?	
  


Coverage	
  is	
  generally	
  on	
  an	
  “All	
  Risk”	
  basis.	
  

This	
  Policy	
  insures	
  against	
  all	
  risks	
  of	
  direct	
  physical	
  loss	
  of	
  or	
  
damage	
   to	
   the	
   property	
   described	
   herein	
   occurring	
   during	
   the	
  
period	
   set	
   out	
   in	
   the	
   schedule	
   subject	
   always	
   to	
   the	
  
definitions,	
   limitations,	
   exclusions,	
   terms,	
   conditions	
   and	
  
warranties	
  of	
  the	
  policy.	
  
Items	
  Insured	
  
Insured	
  property	
  will	
  typically	
  include:	
  
    •  Stock	
  
    •  Cash	
  
    •  FFF/tenant’s	
  improvements	
  
There	
  may	
  also	
  be	
  cover	
  for:	
  
    •    Exhibitions	
  
    •    Entrustments	
  
    •    Sendings	
  
    •    Home	
  risks	
  
In	
  addition	
  to	
  the	
  sum	
  insured	
  for	
  stock,	
  there	
  may	
  be	
  limits	
  
in	
  the	
  policy	
  for:	
  
   •  The	
  maximum	
  value	
  of	
  an	
  individual	
  item	
  
   •  Maximum	
  values	
  for	
  items	
  in	
  window	
  displays	
  
   •  Maximum	
  values	
  for	
  goods	
  out	
  of	
  safe/in	
  safe	
  out	
  of	
  business	
  
      hours	
  
   •  Robbery/hold-­‐up	
  
   •  Smash	
  and	
  grab	
  
The	
  principle	
  item	
  insured	
  is	
  Stock	
  and	
  the	
  principle	
  peril	
  is	
  theft.	
  
An	
  example	
  of	
  a	
  definition	
  of	
  stock	
  is	
  property:	
  
(i)	
  Owned	
  by	
  the	
  named	
  Assured;	
  
(ii)	
  Delivered	
  or	
  entrusted	
  to	
  the	
  named	
  Assured	
  by	
  others;	
  
But	
   comprised	
   only	
   of	
   pearls,	
   precious	
   and	
   semi-­‐precious	
   stones,	
  
jewels,	
   jewellery,	
   watches,	
   watch	
   cases,	
   movements,	
   parts	
   and	
  
attachments,	
  gold,	
  silver,	
  platinum,	
  other	
  precious	
  metals,	
  stainless	
  
steel	
   and	
   alloys	
   and	
   other	
   property	
   usual	
   to	
   the	
   conduct	
   of	
   the	
  
jewellery	
  business	
  insured	
  hereunder…	
  
                         Conditions	
  Precedent	
  
Common	
  requirements	
  are:	
  
•  Details	
  of	
  record	
  keeping	
  	
  
•  Frequency	
  of	
  inventory	
  counts	
  
•  Protection	
  devices	
  and	
  systems	
  should	
  be	
  operational	
  
•  Maintenance	
  agreements	
  shall	
  be	
  in	
  force	
  and	
  systems	
  tested	
  
•  There	
  shall	
  be	
  no	
  changes	
  to	
  any	
  protection	
  systems	
  without	
  Underwriter’s	
  approval	
  
•  All	
  alarms	
  to	
  be	
  activated	
  when	
  the	
  premises	
  are	
  closed	
  for	
  business	
  
•  Display	
  cabinets	
  and	
  showcases	
  to	
  be	
  closed,	
  locked	
  and	
  the	
  keys	
  removed	
  at	
  all	
  times	
  except	
  
   when	
  items	
  are	
  being	
  placed	
  into	
  or	
  removed	
  therefrom	
  	
  
•  Keys	
  to	
  cabinets	
  to	
  be	
  removed	
  and	
  kept	
  on	
  an	
  approved	
  person/in	
  a	
  safe	
  
•  Codes/combinations	
  for	
  safes,	
  strong	
  rooms	
  and	
  alarms	
  not	
  to	
  be	
  written	
  down	
  
•  No	
  duplicate	
  keys	
  to	
  be	
  left	
  on	
  the	
  premises	
  out	
  of	
  business	
  hours	
  
•  Value	
  of	
  stock	
  in	
  shop	
  windows/display	
  cabinets	
  not	
  to	
  exceed	
  set	
  amounts	
  
•  Protocol	
  and	
  procedures	
  in	
  the	
  event	
  of	
  consignments	
  to	
  Third	
  Parties	
  
•  In	
   the	
   event	
   of	
   a	
   loss	
   immediate	
   notification	
   shall	
   be	
   made	
   to	
   the	
   police,	
   Underwriters	
   and	
  
   due	
  measures	
  taken	
  to	
  protect	
  the	
  property	
  from	
  further	
  loss	
  or	
  damage	
  
                             Common	
  exclusions	
  



Examples	
  are:	
  
•  Loss	
  or	
  damage	
  by	
  theft	
  or	
  dishonesty	
  or	
  deception	
  committed	
  by	
  any	
  servant	
  or	
  
   traveller	
  or	
  messenger	
  in	
  the	
  exclusive	
  employment	
  of	
  the	
  Assured	
  
•  Goods	
   found	
   to	
   be	
   missing	
   at	
   stocktaking	
   in	
   respect	
   of	
   which	
   no	
   claim	
   has	
   been	
  
   previously	
  notified	
  
•  Loss	
  of	
  or	
  damage	
  to	
  property	
  insured	
  whilst	
  being	
  worn	
  or	
  used	
  by	
  the	
  Assured,	
  
   any	
  Principal	
  or	
  any	
  director	
  
•  Loss	
  of	
  or	
  damage	
  to	
  goods	
  whilst	
  at	
  an	
  exhibition	
  or	
  any	
  trade	
  show	
  
•  Theft	
   of	
   insured	
   property	
   from	
   a	
   vehicle	
   owned	
   by	
   the	
   Assured	
   or	
   his	
   agents/
   representatives,	
  whilst	
  the	
  vehicle	
  is	
  unattended	
  
•  Loss	
   of	
   or	
   damage	
   to	
   goods	
   whilst	
   being	
   transported	
   by	
   courier,	
   armoured	
   car,	
  
   post	
  or	
  similar	
  
•  Loss	
  of	
  or	
  damage	
  to	
  goods	
  whilst	
  entrusted	
  to	
  clients	
  or	
  customers	
  
•  Unexplained	
  losses	
  or	
  disappearances	
  
Why	
  might	
  an	
  underwriter	
  request	
  a	
  
           pre-­‐risk	
  survey?	
  


A	
  survey	
  will	
  generally	
  be	
  commissioned	
  when:	
  
•  New	
  Risk:	
  typically	
  following	
  completion	
  of	
  the	
  proposal	
  form	
  
     Underwriters	
  might	
  require	
  a	
  pre-­‐risk	
  survey	
  if:	
  
i.  The	
  values	
  declared	
  on	
  the	
  proposal	
  form	
  are	
  particularly	
  high	
  
ii.  There	
  are	
  multiple	
  locations	
  
iii.  There	
  is	
  a	
  statement	
  or	
  declaration	
  in	
  the	
  proposal	
  form	
  that	
  
       gives	
  cause	
  for	
  concern	
  
•  Renewal	
  of	
  an	
  Existing	
  Risk:	
  typically	
  following	
  a	
  loss	
  or	
  series	
  
     of	
  losses	
  during	
  the	
  previous	
  policy	
  period	
  
         “To	
  be	
  the	
  eyes	
  and	
  the	
  ears	
  of	
  the	
  Underwriter”	
  
Pre-­‐risk	
  surveys	
  generally	
  focus	
  the	
  risk	
  of:	
  
   •    Theft	
  
   •    Burglary	
  
   •    Hold-­‐up	
  
   •    Smash	
  and	
  grab	
  
   •    Sleight	
  of	
  hand	
  
   •    Fire	
  
Communication	
  with	
  the	
  Insured	
  


It	
   is	
   key	
   that	
   the	
   Insured	
   understands	
   the	
   purpose	
   of	
   the	
  
survey:	
  
•  The	
  survey	
  is	
  not	
  an	
  exercise	
  in	
  finding	
  fault	
  
•  The	
   survey	
   is	
   designed	
   to	
   identify	
   and	
   remedy	
   any	
  
      weaknesses	
   in	
   the	
   physical	
   protections	
   and	
   the	
  
      procedures	
   in	
   place	
   in	
   order	
   to	
   improve	
   the	
   risk,	
   which	
  
      should	
  ultimately	
  benefit	
  the	
  Insured	
  
     Reporting	
  Scope	
  and	
  Format	
  


Whether	
  the	
  reporting	
  format	
  is	
  a	
  tick	
  box	
  or	
  a	
  narrative	
  text,	
  the	
  
emphasis	
  throughout	
  the	
  survey	
  should	
  be	
  to:	
  
•  Identify	
  risk	
  and	
  
•  Wherever	
  possible	
  seek	
  to	
  control/limit	
  risk	
  
•  Taking	
  into	
  account	
  relevant	
  practicalities	
  such	
  as	
  costs	
  and	
  
•  Seeking	
   to	
   improve	
   areas,	
   such	
   as	
   record	
   keeping,	
   that	
   could	
  
   form	
  the	
  basis	
  of	
  a	
  dispute	
  in	
  the	
  event	
  of	
  a	
  claim	
  
•  If	
  it	
  is	
  not	
  possible	
  to	
  eliminate	
  the	
  risk	
  the	
  focus	
  should	
  be	
  on	
  
   seeking	
  to	
  control	
  the	
  risk	
  
The	
  report	
  should	
  include:	
  
   •    Narrative	
  text	
  
   •    Photographs	
  
   •    Floor	
  plans	
  showing	
  the	
  relevant	
  security	
  features	
  
   •    Copies	
  of	
  maintenance	
  contracts	
  
               Areas	
  to	
  be	
  Covered	
  


The	
  survey	
  should	
  concentrate	
  on	
  three	
  areas	
  
1.  Physical	
  features	
  
2.  Procedural	
  considerations	
  
3.  Human	
  angle	
  
                  1.	
  Physical	
  Features	
  


Start	
  from	
  the	
  outside	
  and	
  work	
  inwards,	
  always	
  seeking	
  to	
  
place	
  yourself	
  in	
  the	
  position	
  of	
  the	
  would-­‐be	
  thief.	
  
•  What	
  type	
  of	
  area	
  are	
  the	
  risk	
  premises	
  located	
  in?	
  
•  Where	
  is	
  the	
  nearest	
  police	
  station	
  and	
  fire	
  station?	
  
•  How	
   far	
   is	
   the	
   alarm	
   monitoring	
   station	
   from	
   the	
   risk	
  
   premises?	
  
•  What	
   are	
   the	
   surrounding	
   premises	
   used	
   for?	
   Are	
   any	
  
   premises	
  empty?	
  
                     1.	
  Physical	
  Features	
  


Look	
  at	
  the	
  layout	
  of	
  the	
  premises	
  and	
  in	
  particular	
  look	
  at:	
  
•  Shop	
  front	
  
•  Glass	
  type	
  and	
  thickness	
  of	
  display	
  windows	
  
•  Door	
  access	
  control	
  	
  
•  Display	
  windows	
  and	
  showcases	
  
•  External	
  and	
  internal	
  doors	
  and	
  locks	
  
•  Safes	
  
•  Strong	
  rooms	
  
•  CCTV	
  system	
  
                         1.	
  Physical	
  Features	
  


•  Intruder	
  Alarm	
  system	
  which	
  should	
  include:	
  
  1.	
     PID	
  (Passive	
  Infrared	
  Detectors)	
  
  2.	
     Alarm	
  Contacts	
  fitted	
  to	
  doors,	
  windows	
  and	
  safes	
  
  3.	
     Vibration	
  Detectors	
  fitted	
  to	
  doors,	
  windows,	
  safes	
  and	
  walls	
  
  4.	
     Connection	
  to	
  an	
  alarm	
  monitoring	
  station,	
  police	
  station	
  or	
  mobile	
  ‘phones	
  
  5.	
     SMS	
  messaging	
  system	
  
  6.	
     Panic	
  buttons	
  
  7.	
     External	
  sirens	
  
  8.	
     External	
  flashing	
  lights	
  
       2.	
  Procedural	
  Considerations	
  


                                 “Start	
  at	
  the	
  start”	
  	
  
       How	
  does	
  the	
  working	
  day	
  start	
  and	
  finish	
  in	
  the	
  business?	
  

•    Procedure	
  for	
  opening	
  and	
  closing	
  
•    Key	
  control	
  
•    Codes	
  and	
  combination	
  locks	
  
•    Is	
  there	
  a	
  separate	
  code	
  to	
  be	
  used	
  in	
  the	
  event	
  of	
  coercion?	
  	
  
•    When	
  are	
  codes	
  changed?	
  
•    What	
  is	
  the	
  process	
  for	
  removing	
  stock	
  from	
  safes	
  and	
  checking	
  
     that	
  all	
  stock	
  is	
  present?	
  
      2.	
  Procedural	
  Considerations	
  


•  What	
  is	
  the	
  procedure	
  for	
  returning	
  stock	
  to	
  safes	
  at	
  the	
  end	
  of	
  
   the	
  working	
  day	
  and	
  checking	
  that	
  all	
  stock	
  is	
  present?	
  
•  What	
  is	
  the	
  process	
  for	
  recording	
  incoming	
  stock	
  and	
  sales?	
  
•  How	
  often	
  are	
  inventory	
  counts	
  undertaken?	
  
•  How	
  often	
  is	
  this	
  audited?	
  
•  Are	
  any	
  items	
  left	
  in	
  display	
  windows	
  out	
  of	
  hours?	
  
•  What	
   is	
   the	
   procedure	
   for	
   shutting	
   the	
   business	
   during	
   lunch	
  
   break?	
  
•  Maintenance	
   agreements	
   in	
   place	
   with	
   alarm/CCTV	
  
   manufacturer?	
  
                       3.	
  Human	
  Angle	
  


There	
  are	
  two	
  issues	
  to	
  consider:	
  
1.  Concentration	
  of	
  responsibilities/power	
  in	
  one	
  person	
  
    making	
  them	
  vulnerable	
  to	
  coercion	
  
2.  Concentration	
  of	
  responsibilities/power	
  in	
  one	
  person	
  to	
  
    the	
  extent	
  that	
  they	
  are	
  able	
  to	
  perpetrate	
  a	
  fraud	
  alone	
  
                         3.	
  Human	
  Angle	
  


Such	
  a	
  scenario	
  usually	
  occurs	
  with	
  responsibility	
  being	
  vested	
  in	
  
one	
  trusted	
  employee,	
  normally	
  a	
  store	
  manager.	
  The	
  key	
  areas	
  to	
  
look	
  at	
  are:	
  
•  Who	
  has	
  keys	
  for	
  roller	
  shutters,	
  external	
  doors,	
  internal	
  doors	
  
   and	
  safes?	
  
•  Who	
  knows	
  the	
  alarm	
  codes?	
  
•  Who	
  knows	
  the	
  combination	
  codes	
  to	
  safes?	
  
•  Who	
  is	
  responsible	
  for	
  checking	
  stock	
  at	
  the	
  end	
  of	
  the	
  working	
  
   day	
  when	
  it	
  is	
  put	
  into	
  the	
  safe	
  and	
  vice	
  versa?	
  
•  Who	
  is	
  responsible	
  for	
  undertaking	
  internal	
  inventories?	
  
                        3.	
  Human	
  Angle	
  


The	
  key	
  points	
  to	
  focus	
  on	
  are:	
  
•  Each	
  activity	
  should	
  involve	
  at	
  least	
  two	
  people	
  and;	
  
•  No	
   one	
   person	
   should	
   be	
   able	
   to	
   undertake	
   all	
   activities	
  
   without	
  the	
  involvement	
  of	
  another	
  person.	
  
Just	
  because	
  someone	
  has	
  worked	
  for	
  the	
  Insured	
  for	
  many	
  
years	
  does	
  not	
  mean	
  that	
  they	
  are	
  immune	
  to	
  temptation.	
  
           The	
  Recommendations	
  


Always	
   discuss	
   and	
   agree	
   any	
   proposed	
   recommendations	
  
with	
  the	
  Insured.	
  
Key	
  points	
  relating	
  to	
  recommendations:	
  
•  They	
  should	
  be	
  practical	
  
•  They	
  should	
  be	
  economic	
  
•  They	
  don’t	
  have	
  to	
  be	
  complex	
  
There	
  is	
  no	
  shame	
  in	
  not	
  making	
  any	
  recommendations!	
  
                              Common	
  Issues	
  


•  Familiarity	
   breeds	
   contempt	
   –	
   reluctance	
   to	
   implement	
   certain	
  
   recommendations	
  because	
  “it	
  has	
  never	
  happened	
  before”	
  
•  The	
  economic	
  argument	
  
•  PIR	
  detectors	
  that	
  do	
  not	
  work	
  
•  Damaged	
  CCTV	
  cameras	
  
•  CCTV	
  footage	
  that	
  is	
  not	
  recorded	
  
•  Access	
   codes	
   for	
   alarms	
   that	
   are	
   not	
   changed,	
   even	
   when	
   a	
   member	
   of	
  
   staff	
  leaves	
  
•  Concentration	
  of	
  responsibility	
  in	
  one	
  employee	
  
•  Failure	
   to	
   correctly	
   declare	
   aggregate	
   maximum	
   values	
   at	
   risk/maximum	
  
   value	
  one	
  item	
  
•  Keys	
  left	
  in	
  cabinets	
  
                          Common	
  Issues	
  


•  Misunderstanding	
  of	
  the	
  terms	
  “strong	
  room”.	
  	
  
UL	
   608	
   is	
   the	
   industry	
   standard	
   relating	
   to	
   burglary	
   resistant	
  
doors	
  and	
  modular	
  panels.	
  Class	
  M	
  is	
  the	
  minimum	
  standard	
  and	
  
provides	
   15	
   minutes	
   of	
   protection	
   against	
   attacks	
   using	
   cutting	
  
tools,	
  cutting	
  torches	
  (not	
  explosives).	
  The	
  minimum	
  construction	
  
includes:	
  
   1.    Reinforcement	
  on	
  all	
  6	
  sides	
  
   2.    With	
  12”	
  of	
  poured	
  concrete	
  
   3.    With	
  6	
  rows	
  of	
  reinforced	
  bars	
  
   4.    3”	
  in	
  centre	
  
             Risks	
  Written	
  Overseas	
  


Many	
   JB	
   risks	
   are	
   written	
   out	
   of	
   the	
   London	
   market.	
   A	
  
common	
   problem	
   encountered	
   is	
   Underwriter	
   expectation	
  
against	
  reality.	
  
•  Shop	
  fronts	
  and	
  doors	
  	
  
•  Multiple	
  items	
  removed	
  from	
  cabinets	
  at	
  one	
  time	
  
•  Cash	
  driven	
  businesses	
  
•  Adequacy	
  of	
  record	
  keeping	
  
END	
  

								
To top