THE STOCK

THROUGHPUT
SOLUTION IN A SINGLE POLICY
TRANSIT AND STOCK
 WHAT IS IT?
STOCK
THROUGHPUT
An “All Risks” Marine Cargo policy, suited to
retailers, manufacturers and traders, covering:
ƒƒ Inland and international transits by any mode
of transportation
ƒƒ Inventory (stock), including raw materials,
work in progress as well as finished goods

THE BENEFITS
ƒƒ Seamless cover, avoiding gaps in cover:
ɞɞ Stock and transit in one single policy
ɞɞ Cover on a “cradle to grave” basis
ƒƒ Simplification of claims settlement:
Referral to one policy in event of a claim
ƒƒ Reduced administration:
ɞɞ Generally no shipment or location
reporting requirements
ɞɞ Premium based on a single rate applied
to sales turnover
ƒƒ Lower premium spend: One single policy rather
than multiple policies
ƒƒ No time restriction how long goods are in store
ƒƒ Competitive stock deductibles: Stock deductibles
generally lower in the cargo market
ƒƒ Beneficial stock limits: Cover on an “any one
location” basis avoiding named location limits
ƒƒ Reduced business interruption exposure
on non-marine placement: Basis of valuation
linked to final sales price
ƒƒ Frees up capacity in the non-marine
markets: Stock/inventory values placed in the
marine market
ƒƒ Flexibility: Insured can choose which exposures
they wish to include under their stock throughput
ƒƒ Control over insurance: By insuring stock/
inventory in third party locations insured determines
scope of cover, based on their requirements
STOCK THROUGHPUT - HOW IT WORKS

Incoming
Local purchase of supplies, factory or distribution Imported purchase of supplies,
raw materials/finished products warehouse raw materials/finished products

Pre-manufacture stock Pre-manufacture stock

One single ‘per location’ limit Including during manufacturing

Storage
for stock. Avoiding named but not losses resulting from
location limits. One single limit Manufacturing plant/Factory the manufacturing process
for transit

Storage of finished products

Overseas storage Local transport

Outgoing
Final distribution
Transit to final customer

PLACEMENT STRUCTURE COMPARISON

Traditional Structure

Separate Individual
Real Property
Personal Property Ocean Marine
Policies
Inland Transit
Inventory Transit
Business Interruption

Stock Throughput
and Property Option
Integrated Program

Stock Throughput Property

Deductible/Retention
FREQUENTLY ASKED QUESTIONS
IS THIS A NEW CONCEPT?
No. This is a tried and tested concept
which has been placed in the cargo
insurance market for over 25 years.
Stock throughputs are an integral part
of most insurer placement portfolios.
WHAT HAPPENS TO MY EXISTING
PROPERTY POLICY?
Your existing property policy will remain in
place for your buildings/assets and business
interruption (BI). The stock however, will be
removed from this policy and placed in the
marine insurance market. This will reduce
your property damage/business interruption
overall premium expenditure (although your
marine premium may increase). In order
to maintain BI coverage for ongoing loss of
profits etc, your property damage/BI policy
should be specifically amended to provide
BI cover arising out of damage to stock even
though that policy will no longer be insuring
the physical damage to the stock.
DO I STILL HAVE BUSINESS INTERRUPTION
(BI) COVER ON MY STOCK?
There is no formal BI cover for the stock.
However, the basis of valuation is usually
negotiated on final sales price, which includes
gross profit. This means that there is actually
an improvement in the basis of valuation, as
the final calculation of a stock and BI loss is
much simpler.
WHAT ARE THE BENEFITS OF INCLUDING
STOCK UNDER A STOCK THROUGHPUT
POLICY?
ƒƒ Improved basis of valuation
ƒƒ Improved coverage on unnamed locations
ƒƒ Wider coverage terms (‘A’ Clauses on
stock and not on a named peril basis)
ƒƒ Cargo insurers will cover third party
locations that the non-marine market
would not include
WHEN DOES COVER CEASE?
In most cases, cover ceases upon delivery to
final customer. For some business this may
include coverage whilst in showrooms, or in
stores before the final customer purchases
the item.
HOW DO I PAY MY PREMIUM?
There is flexibility as to the basis of premium
payment. The most usual method is to set
up an initial deposit premium which is then
adjustable on expiry at a single rate based on
sales turnover or total cargo values.
IS IT ALWAYS CHEAPER?
No. It does depend on the various states of the
marine cargo and property insurance market
and their interaction. However, these markets
are often in different cycles to one another.
Particularly when the property/non-marine
market is hard, the marine market may offer
better possibilities of savings in not just
premium but also in levels of deductible/
self-retention.
WILL MY CURRENT INSURER BE ABLE TO
OFFER THIS PRODUCT?
Many domestic insurers will not be able
to offer this product without access to the
international markets and an international
brokerage, such as Willis.
HOW WILL CLAIMS BE HANDLED?
Your claim will be handled by your cargo
claims specialist, with all documentation
on the loss being directed to your marine
insurer rather than your property insurer.
Unlike other major brokers, Willis does not
outsource its claims service. With over 100
claims specialists globally we are dedicated in
assisting you in getting your claim resolved by
your insurers promptly, to your satisfaction
and with a minimum amount of disruption.
QUESTIONNAIRE
INBOUND SHIPMENTS
ƒƒ Description/type of goods travelling inbound (give % split)
ƒƒ From where do the goods originate? (give % split)
ƒƒ Valuation basis of inbound goods
ƒƒ Average and maximum shipment values
ƒƒ Packing details
ƒƒ Primary coverage or contingent coverage (give % split)

OUTBOUND SHIPMENTS
ƒƒ Description/type of goods travelling outbound (give % split)
ƒƒ What are the destinations of outbound goods? (give % split)
ƒƒ Valuation basis of outbound goods
ƒƒ Average and maximum shipment values
ƒƒ Packing details
ƒƒ Primary coverage or contingent coverage (give % split)

INVENTORY COVERAGE
ƒƒ Storage locations (complete addresses)
ƒƒ Valuation basis whilst static
ƒƒ Average and maximum monthly inventory exposure
per location
ƒƒ Construction details of the locations
ƒƒ Survey reports may be required

INTERCOMPANY MOVEMENTS
ƒƒ Average and maximum shipment values of these movements
ƒƒ Valuation basis of these shipments
ƒƒ Total annual values exposed

GENERAL
ƒƒ Background details of the insured’s operations
ƒƒ Annual sales turnover
ƒƒ Loss history for transits and inventory for the past five years
from ground up/first dollar
ƒƒ Preferred deductible levels
ƒƒ Rights of recovery against hauliers and other third parties

Depending on the nature of the risk additional information

may be required at a later date.
Willis Limited

The Willis Building

51 Lime Street
London, EC3M 7DQ
United Kingdom
Tel: +44 (0)20 3124 6000

www.willis.com

This newsletter is published for the

benefit of clients and prospective clients
of Willis. It is intended to highlight
general issues relating to the subject
matter which may be of interest and
does not necessarily deal with every
important subject nor cover every
aspect of the subjects contained herein.
If you intend to take any action or make
any decision on the basis of the content
of this update, you should first seek
specific professional advice and verify
its content. Copyright Willis 2014.
All rights reserved.

Willis Limited, Registered number:

181116 England and Wales.
Registered address:
51 Lime Street, London EC3M 7DQ.
A Lloyd’s Broker, Authorized and
regulated by the Financial Conduct
Authority for its general insurance
mediation activities only.

13370/08/14