In early March, a tractor-trailer carrying aload of HP laptops smashed through a guardrail, swerved off Highway401 near Woodstock, Ontario, and plunged into the icy Nith River.Anand Vora, 38, and 37-year-old Jasit Sandhu, the two team driverstasked with transporting this high-value cargo across the Canadianborder from Chicago to Mississauga, didn't make it out alive.

This tragic incident represents one of the most costly types ofMotor Truck Cargo (MTC)-related claims insurers see most often,says Helen Leonard, product director for Inland Marine, Americas,at Allianz Global Corporate & Specialty (AGCS) in NewYork. 

After collision, the next-costliest MTC claims are cargo theftand then fire, Leonard says; frequent accident claims involvebad-weather collisions with other trucks, cars and guardrails, androllovers are common. Collisions of this sort “will make them goright off the road and tip over,” says Leonard.

Motor Truck Cargo is not an easy line of insurance to write, asit has so many high-risk elements, including transportation, fleetmanagement, accidents and theft—and losses from crashes can add up.Still, any insurer selling Inland Marine needs to include it: Thus,companies that write MTC will likely want to have a morediversified portfolio and should consider balancing their book ofbusiness to rely less on this high-risk coverage, Leonard says.Some carriers may limit MTC coverage to 15 percent of their book ofbusiness, while others may allow it up to 35 percent. 

To keep its own business balanced, AGCS keeps MTC as a smallportion of its overall book. She declines to say how much, butnotes the company's combined loss ratio for Motor Truck Cargo in2012 was “in the 80s.”  

Collision claims are costing AGCS more than theft claims,Leonard says, noting that when dealing with expensive haulers,finding the parts and the labor to complete repairs has becomeincreasingly costly.

Most MTC claims for Lockton Cos. also tend tobe for trucking accidents, says Sheri Wilson, the broker's seniorvice president and national property claims practice leader inDallas. These are usually first-party claims or related tofirst-party property or standalone first-party policies.

However there are certain geographic areas where armed theftbecomes a concern. Shipments made from Mexico to the U.S., forexample, can be iffy: “There's a good likelihood [your shipment]won't get here,” says Wilson.      

In a typical armed-theft scenario, several large, black SUVswill pull up next to a freight truck and take it at gunpoint,leaving the driver alive but stranded, Wilson explains. Locktonclients have tried concealing their cargo by using completelyunmarked trucks, to no avail, she says. The thieves are targetingwhatever they think they can easily steal.

AGCS has not seen any armed heists, but Leonard says that inthose instances she would rather see the drivers simply give up thecargo: “If they are held up, I'd rather they hand over the truckthan lose their life.”

In Mexico and Brazil, trucking companies try to deter cargotheft by remotely opening and closing of the rear [trailer] doorsonly at each end of the delivery route, he says. Both countries dohave more violent types of theft, with “the occasional gangshootout and cargo heist,” says Peter J. Scrobe, vice president ofloss control for Starr Marine. “It's still like the Wild West downthere at times.”

Luckily, armed cargo thefts or hijackings are fairly rare in theU.S., says Scrobe: “There have been very few incidents here in theU.S. where violence has become evident. … It's only been startingto show up this past year: a couple of incidents where guns weredrawn on drivers and so on. We're hoping that's just ananomaly.” 

Metals are high among overall theft claims, says Lockton ClaimsConsultant Terri Hileman. “That's what we've seen the most of, andprobably the highest dollar attachment,” she says. 

Copper, which is netting roughly $3.50 per pound, is ahigh-theft target because it is used in the manufacturing of steel,says Hileman: “We saw that in the P&C area for years before itstarted being taken in transit.” 

Claims costs for thefts have been dropping slightly because ofconcentrated loss-control efforts in the Transportation andShipping industries, which have “engineered the risk out of thosehigh-risk cargo shipments,” says Hileman, adding that from whatshe's seen, the overall dollar value of each shipment is down toless than $1 million. 

Additionally, manufacturers, growers and shipping agencies aremore often conducting security reviews on a global level “totighten up those areas where cargo is disappearing—either beingmisdirected or hijacked,” adds Hileman. “So the claims costs arestaying static.”

Lockton companies have been conducting security reviews andtightening their contracts with carriers, she adds. Distributionpoints, where goods may be stored in lots for days at a time, havebecome crucial: A large number of shipments tended to disappearduring weekends, when cargo was stationary and either unattended orunder only light security.

Hileman says Lockton also is seeing more violent seizures ofhigh-risk cargo overseas: “My clients with South American exposuresare seeing it. It's taken at gunpoint, even at sea.” Lockton'scargo underwriters also are seeing an uptick in food & beverageand pharmaceutical thefts, she adds: “It all comes down to ease ofliquidation: How quickly can that cargo be sold off?”

For Chubb Group, “Cargo claims run the gamut,” says Bob Opitz,the carrier's worldwide Inland Marine manager. Many of its MotorTruck Cargo claims result from targeted cargo thefts, especiallyFictitious Pickup scams, wherein thieves use an online load boardto bid on shipment offers then use false IDs when they pick up thegoods. 

A lot of MTC claims also center on targeted commodities likepharmaceuticals; tobacco; alcohol products; and consumerelectronics and appliances—things that are easy to sell in a blackmarket environment, says Opitz. It's all about how easily the goodscan be fenced, he adds.

AGCS further heightens its MTC coverage with a dedicatedTransportation Claims unit that deals exclusively with MTCclaims. 

“Claims people at other carriers will movefrom Motor Truck Cargo claims to Contractor's Insurance, Builder'sRisk, or Property,” says Leonard (left). “We have a claimsdepartment that really, truly understands the Transportationbusiness. We felt like it was that important, even though MotorTruck Cargo is not a huge part of our book.” 

The turnaround time for the AGCS unit to settle a claim can beas little as two weeks, according to Leonard. Its dedication to itsMTC customers was especially evident following Superstorm Sandy,she adds: “Our claims people took care of our clients before theytook care of themselves.”