THE BEST KEPT SECRET IN PROPERTY INSURANCE - Willis

INSIGHTS INSURANCE, BENEFITS AND RISK REVIEW

June 2011

THE BEST KEPT SECRET IN PROPERTY INSURANCE on an all-risk, no-gap basis. Goods can be covered from the moment the insured assumes an interest in those goods to moment that interest ceases – even if the goods in question are in the hands of a third party. That includes raw materials overseas; parts at a supplier’s plant; stock in detention, finished goods on their way to a customer – and depending on the way contracts are written, even on the customers’ shelf before the sale is made. The goods in all of these forms are covered in transit or storage – whether in a boat, a truck, a train or a warehouse.

So why the secret? Marine Stock Throughput is actually growing in popularity but remains underutilized as a coverage option for several reasons. The main reason may be the way the insurance industry works. Lines of coverage fall into different categories and may be offered by different markets – sometimes in different countries. When this coverage first emerged in the 1980s, London was the only place to find it. Now, the US markets are on board. Property brokers focused on Property markets, however, may be still unfamiliar with Marine offerings, operating under the mistaken assumption that if it’s called Marine, it must be shipping related. Some brokers know about the Marine option but aren’t comfortable offering it. Only a

broker with access to Property and Marine expertise will be able to offer the best combination. The Marine and Property lines not only offer unique products but differ in underwriting and claim adjusting. As a rule, the Marine is more flexible in terms and conditions and more open to catastrophic coverage. Now that Property rates are climbing because of catastrophic losses from the Japan to Joplin, MO, the Marine market may be even more appealing. Many insureds find that claim adjusting is more efficient on the Marine side than the Property side – the check comes quicker. The breadth of the Marine product is its chief strength. Coverage can be obtained

8 REASONS TO CONSIDER STOCK THROUGHPUT COVER 1) A  ll-risk, no-gap cover Covered from the moment the insured assumes an interest in those goods to moment that interest ceases.

2) N  o time limitations Cover continuous on the goods in transit and storage as long as the insured is at risk.

3) C  ompetitive rating structure Non-reporting policies rated against sales or on flat annual premiums with goods insured for their selling price.

INSIGHTS INSURANCE, BENEFITS AND RISK REVIEW

4) L  ow deductibles Available for goods in storage/detention, including Earthquake and Windstorm zones.

5) L  imits of liability Limits in excess of $100 million per location available, including California.

6) C  at coverage Includes significant global Earthquake, Windstorm and Flood cover – perils often subject to sublimits on a Property policy.

7) T  erms of sale or purchase Goods are insured regardless of the terms of sale or purchase if the insured has an interest in the goods at the time of loss. Also covers goods on consignment.

June 2011

8) C  overing the Property deductible Programs can be strategically structured to cover high deductibles in Property policies. Like much Property coverage, Marine Stock Throughput protects against physical damage. Supply chain or transit delays are not covered unless the goods are damaged. However, the fact that insured values are based on full sale price means, in effect, that profits are protected as well as the physical goods. This provides a close approximation of Business Interruption coverage. For a relatively little known product, Marine Stock Throughput insurance does a lot, and insurance buyers of every size and location should be aware of its advantages.

FOR MORE INFORMATION Please contact your local Willis representative, call 18664060608 or visit www.willis.com. Willis is a leading global insurance broker providing insurance, risk management and human resource solutions.

Copyright 2011 Willis