In the 1980s, cargo theft in Brazil increased due to fraud involving truck drivers. Insurers and vendors began closely vetting drivers and including risk management clauses in policies, reducing losses by 50%. Through the 1990s and 2000s, criminals adapted so clauses evolved to require GPS tracking and signed prevention programs. Now Brazil has over 200 cargo protection vendors and 50 tracking manufacturers, showing risk management clauses have helped insurers take on risks and customers prioritize security.

1. LATAMIR
22 COMMENT
CARGO THEFT
PREVENTION IN BRAZIL
Luis Vitiritti, marine risk consultant, Latin America at Zurich,
outlines the development of risk management clauses for inland
cargo insurance in Brazil
I
n the 1980s, robbery of cargo in in their wording policies as security drivers to follow their orders. Insurers and
Brazil increased substantially, recommendations. vendors, in turn, reacted by enhancing
largely due to fraud caused by During the middle of this decade, the wording clauses to be more specific
drivers who gave cargo to thieves the high loss ratios of the local market in the risk management clauses.
in exchange for money. meant that insurers were being forced Customers, insurers, brokers, vendors
As a result, insurers and local risk to include loss prevention programmes and transporters were now following the
management vendors began to more in wording clauses, which was named same process of risk management, and
closely analyse driver backgrounds, as the risk management clause in inland in particular, the wording clauses written
including commercial and bank history cargo, a move which again resulted in a in the policy. Such clauses also served to
and criminal records, an action which 50% decrease in losses. protect customers against damages and
led to a 50% decrease in robberies in By the mid-2000s, however, criminals accidents.
that period. had started to learn how to turn off the Nowadays in Brazil, we have more than
By the end of the 1990s, however, cargo tracking satellite systems before forcing 200 vendors for risk management cargo
“
theft rates were growing again, this time protection, and another 50 tracking
as a result of typical hijacking. This saw device manufacturers, though the types
a range of new tools being added to risk of goods that thieves are targeting
management programmes for customers, remain almost the same.
including, but not limited to: Risk management clauses have
substantially helped insurers to have
• A loss prevention programme (duly sufficient capacity to act on risks when
signed by transporter, shipper and
insurer)
Nowadays in that would not have been possible in
the past, as well as helping customers
• Route analysis and nominated
secure parking places on the main Brazil, we have to understand that security and the
protection of cargo care is an important
more than 200
routes/risk routes part of the delivery service.
• The installation of a GPS tracking Today, we are seeing some losses in
satellite system on valuable cargoes other countries in Latin America, such as
• The inclusion of the same loss
prevention terms from the loss
vendors for risk the Colombian, Venezuelan and Mexican
markets, which could be avoided if
prevention programme in wording
clause for each inland policy
management similar programmes and specific rules
in wording clauses were enacted.
contains, signed by all parties.
cargo Hopefully, local risk managers will follow
Brazil’s example and start to implement
During this period, a number of
insurers started to include these rules protection” similar clauses to protect their business
continuity and best practices. ■
022_LIR10_Comment.indd 22 25/07/2012 15:51