In the simplest terms, a Stock Throughput policy combines the worldwide transit and inventory exposures of a client into one policy.
Among the many benefits of this approach are:
■ Global “All Risks” cover for all raw materials, work in progress and finished stock during transit, manufacture and storage, eliminating potential coverage gaps between separate policies.
■ Competitive premium compared with the traditional method of insuring transits and inventory separately.
Cargo market capacity for catastrophe risks such as earthquake, windstorm and flood, offering consistently lower deductibles than are provided by the property markets.
Reduced administration for the client.
No time-consuming declarations to submit.
Inventory can be valued on a selling price basis, reducing the Business Interruption exposure.
Whatever your experience of this concept, these hints will improve its potential:
■ If there are no insured imports or exports, the Stock Throughput will still work, using domestic transits only.
■ It is not restricted to manufacturing companies as it works equally well for distributors, wholesalers and importers/exporters.
■ Be sure to obtain a full credit from property underwriters for the reduced TIV created by removing the inventory from that policy.
Our Underwriters rate the inventory on the AVERAGE, not the Maximum values.
Whether attacking or defending an account, offering the Stock Throughput will demonstrate innovation and reduce overall cost and risk retention.
The truth about Stock Throughput
When offering a “Stock Throughput” policy to our clients, certain apparent obstacles may need to be overcome:
■ For clients who own and operate their own premises the stock is normally included in their property policy.
Solution
If the stock element is a substantial proportion of the total insured value under the property policy it is possible to negotiate a significant reduction in the premium when removing the stock from the policy.
It must be borne in mind that many importers/ distributors lease warehouse premises and therefore do not insure the physical building.
■ Removing the stock from a property policy means that separate
deductibles will apply the stock and the property.
Solution
In the majority of cases deductibles under a Stock Throughput policy are considerably lower than those under a Property policy. This is particularly true of catastrophe deductibles.
■ The property policy will no doubt incorporate Business Interruption coverage. By removing the stock element the property policy may not respond to a business interruption claim following a stock loss.
Solution
All transits and stock can be insured for a “Selling Price” valuation under the Stock Throughput policy. This accommodates any loss of profit in respect of goods in the current supply chain. Inevitably, there will be increased costs incurred in obtaining alternative warehousing and these costs can be covered by means of an Extra Expenses clause.
The fact that so many leading companies choose the Stock Throughput route emphasizes that it remains a strong, competitive and viable alternative in the Cargo market.
for further details and Conditions of Insurance please visit our site http://greenwoods.org/ebooks/PRstockthrouput/index.html
