In early March, a tractor-trailer carrying a load of HP laptops smashed through a guardrail, swerved off Highway 401 near Woodstock, Ontario, and plunged into the icy Nith River. Anand Vora, 38, and 37-year-old Jasit Sandhu, the two team drivers tasked with transporting this high-value cargo across the Canadian border from Chicago to Mississauga, didn't make it out alive.

This tragic incident represents one of the most costly types of Motor 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 New York.

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

Motor Truck Cargo is not an easy line of insurance to write, as it has so many high-risk elements, including transportation, fleet management, 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 more diversified portfolio and should consider balancing their book of business to rely less on this high-risk coverage, Leonard says. Some carriers may limit MTC coverage to 15 percent of their book of business, while others may allow it up to 35 percent.

To keep its own business balanced, AGCS keeps MTC as a small portion of its overall book. She declines to say how much, but notes the company's combined loss ratio for Motor Truck Cargo in 2012 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 become increasingly costly.

Most MTC claims for Lockton Cos. also tend to be for trucking accidents, says Sheri Wilson, the broker's senior vice president and national property claims practice leader in Dallas. These are usually first-party claims or related to first-party property or standalone first-party policies.

However there are certain geographic areas where armed theft becomes a concern. Shipments made from Mexico to the U.S., for example, 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 SUVs will pull up next to a freight truck and take it at gunpoint, leaving the driver alive but stranded, Wilson explains. Lockton clients have tried concealing their cargo by using completely unmarked trucks, to no avail, she says. The thieves are targeting whatever they think they can easily steal.

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

In Mexico and Brazil, trucking companies try to deter cargo theft by remotely opening and closing of the rear [trailer] doors only at each end of the delivery route, he says. Both countries do have more violent types of theft, with “the occasional gang shootout and cargo heist,” says Peter J. Scrobe, vice president of loss control for Starr Marine. “It's still like the Wild West down there at times.”

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

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

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

Claims costs for thefts have been dropping slightly because of concentrated loss-control efforts in the Transportation and Shipping industries, which have “engineered the risk out of those high-risk cargo shipments,” says Hileman, adding that from what she's seen, the overall dollar value of each shipment is down to less than $1 million.

Additionally, manufacturers, growers and shipping agencies are more often conducting security reviews on a global level “to tighten up those areas where cargo is disappearing—either being misdirected or hijacked,” adds Hileman. “So the claims costs are staying static.”

Lockton companies have been conducting security reviews and tightening their contracts with carriers, she adds. Distribution points, where goods may be stored in lots for days at a time, have become crucial: A large number of shipments tended to disappear during weekends, when cargo was stationary and either unattended or under only light security.

Hileman says Lockton also is seeing more violent seizures of high-risk cargo overseas: “My clients with South American exposures are seeing it. It's taken at gunpoint, even at sea.” Lockton's cargo underwriters also are seeing an uptick in food & beverage and pharmaceutical thefts, she adds: “It all comes down to ease of liquidation: 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 Motor Truck Cargo claims result from targeted cargo thefts, especially Fictitious Pickup scams, wherein thieves use an online load board to bid on shipment offers then use false IDs when they pick up the goods.

A lot of MTC claims also center on targeted commodities like pharmaceuticals; tobacco; alcohol products; and consumer electronics and appliances—things that are easy to sell in a black market environment, says Opitz. It's all about how easily the goods can be fenced, he adds.

AGCS further heightens its MTC coverage with a dedicated Transportation Claims unit that deals exclusively with MTC claims.

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

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

Special Reports /

Collisions Top Cargo Thefts for Costliest Inland Marine Claims

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