High Risk, High Reward

The challenge: fast insurance for high-dollar cargo. The solution: E- app automation. By Kevin Fritz

WHEN OFFICIALS AT LANDSTAR SYSTEM INC.’S RISK MANAGEMENT SUBSIDIARY REALIZED INSURANCE COVERAGE ON HIGH-END SHIPMENTS MIGHT NOT WORK FOR THEM, THEY CALLED IOA FOR HELP. IOA’S THOMAS SCALISE, IN TURN, HELPED TO DESIGN A POLICY WITH LLOYD’S OF LONDON AS THE UNDERWRITER.

It must have been some policy. That was 20 years ago this July, and the relationship between the two corporations is still going strong. Scalise, IOA senior vice president, has stayed close to the account throughout the past two decades. “I was the one who took the policy to Landstar,” he remembers. “We had established a reasonable rate that was acceptable to Landstar. It has been very successful between Landstar and Lloyd’s of London.” The problem Landstar faced was that certain shipments  necessitated additional insurance coverage. So Scalise created a highly specialized insurance plan — the High-Value Trip Transit Cargo Policy — to insure high-value shipments.

“They needed to avoid bearing catastrophic losses,” he notes. The potential consequences of a large claim may have resulted in higher rates, higher deductibles or even loss of insurance. The High-Value Trip Transit policy was the answer. Director of Risk Management Bryan Hutchinson says the relationship with IOA has truly benefitted the company by helping Landstar make a name for itself in the industry, as one to trust when it comes to shipping high-dollar cargo. Hutchinson cites the High-Value Trip Transit policy as assisting, in particular, by transferring risk and giving his staff better insight into what kinds of risks they are taking on. “It gave us a new comfort level with high-value loads,” he states.
And that’s especially important, given the size that Jacksonville, Fla.-based Landstar has become over the years. Indeed, the operation is more than just about trucking strawberries or juice boxes out West. Landstar is also involved in air and sea shipments. Moreover, Landstar is a major provider of integrated supply-chain solutions, offering specialized transportation, warehousing and logistics services to customers worldwide via agents, third-party capacity owners and employees. It has a network of more than 1,000 independent sales agents, 8,000 business capacity owners, and 25,000 contract carriers and warehouse capacity owners.

That’s a lot to worry about. Yet, Scalise and IOA aren’t ones to rest on their laurels. As technology advanced, so did the dynamics of the cargo coverage. The most prominent addition to IOA’s relationship with Landstar was a Web-based program created and serviced by IOA to help save time and bolster risk-management efforts when dealing with high-dollar cargo shipments. The program allows IOA to monitor and issue coverage for high-value shipments.

All parties get a copy of the paperwork for each and every high-value shipment handled by Landstar. Landstar’s risk management team can then monitor all shipments, particularly those on the very high end. According to Hutchinson, the automation has also helped him run more efficiently by providing the visibility needed to evaluate risk and minimize losses. “The Web-based program has given us more opportunity to increase shipping volumes,” Hutchinson says, noting the online program has reduced the time to process a shipment from 20 minutes to less than five.

Today, IOA offers selected motor carriers the option of the High-Value Trip Transit Cargo Policy to insure truck load shipments generally valued at more than $100,000 up to an agreed amount. An average of 25 loads per month is required to establish a High-Value Trip Transit Cargo Policy. “It’s unique in the industry,” Scalise says about the program. “It’s a cargo policy that has a Web-based component and offers added security measures for the client. The end result is an integrated system generating a single, focused, powerful solution.” All of which enables Landstar to keep on trucking.