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Assessing the risk

Sep 18, 2014
For many movers, assessing the real risks of what they do has been something of an arbitrary process. A new system that Willis has been trialling for the last 2-3 years has the ability to target risks more accurately. Steve Jordan spoke to Boris Populoh, Senior Vice President, Willis Relocation Risk Group, to find out more.



“The mentality of loss adjusting is changing, “said Boris Populoh. “No longer does the rate drive the programme, the programme drives the rate.”

For most movers, the rate they pay for their marine insurance is based simply on the overall claims loss ratio. At the end of the year their broker sends a statement detailing the premiums collected and claims paid (claims ratio) and announces the consequential rate for the following year.  But that is a fairly broad-brush approach which does not provide much information for the moving company about where the claims are arising and what can be done to prevent them.  For some years Willis has been working to drill down into that data, particularly for its larger clients, to identify where things are going wrong and provide them with a more accurate insurance rate based upon specific experience rather than generalities.    

“Insurance companies collect a huge amount of data about origin, destination, shippers and values,” explained Boris.  “The next step is to develop reports that actually mean something.  Rather than just sending a report that says how many shipments, how many claims and giving a loss ratio, there’s much more behind.  By analysing the multiple data points relevant to any shipment it’s possible to provide much more in-depth information.”

For example, third-party relocation companies work with many movers.  By drilling down into the broad data it’s possible to provide them with a vendor management service that can accurately identify not only the performance of each supplier, but in what areas of the service individual companies perform well, and not so well. “It’s possible that one or two of the movers are causing 30-40% of the losses,” said Boris. “If you can’t identify those individual providers then the whole programme is penalised and all the providers have to pay a higher rate.”

Of course it might not be that an individual mover is having trouble with everything it does.  One supplier might be very good into the USA and bad into Asia, or the other way around.  By analysing the data it’s possible to identify these problem areas and give the supplier the information required to take remedial action.  “We don’t tell people what to do,” said Boris, “we just give them the information they need to make well-advised decisions.”

The same thing applies to international moving companies. They need to know where the claims are coming from.  Many agent-to-agent relationships are based on friendships.  But those friendships might be masking a problem and costing the company money.  If it’s possible to identify where and how damage is occurring, companies will have the information they need to manage those relationships more effectively.  “If you maintain a relationship that is based on friendship it could be costing you money,” said Boris. “But that’s up to you. If you are paying 15% more because one of your origin or destination agents is causing you problems, is that a good move for you? It might be if you get good reciprocation but, if you have the information, at least you can quantify what the cost is in real dollar figures.”

The information can be useful in other ways too.  It is possible to assess the performance of individual packing crews and use that information to develop an incentive programme.  By recording a variety of data points it’s even possible to cross-reference the claims information for a crew to the potential cause of the damage.  Clearly it would not be reasonable to penalise a crew for damage caused as a result of a fire; but poor packing, or mildew damage caused by wrapping damp items would count against them.  It would even be possible to change operating procedures or educate crews more effectively using the data collected. 

The Willis programme is less than three years old so the process is still in its early stages.  Taken to its logical conclusion, information gathered by the insurance company could be used to manage agency and supplier relationships; develop training programmes; incentivise staff; refine working practices; and even set premium rates for individual shipping lanes.   “It’s more than just gathering information, it’s putting that information into context and making it relevant as an effective management tool,” said Boris. For more information contact Boris on Boris.Populoh@willis.com.

Boris Populoh

Boris Populoh brings 20 years of broad-based international business, HR and management experience to the international transportation and logistics industry.  He has held a number of senior managerial and executive leadership positions with trade and industry groups and holds a BA in International Diplomacy and a MA in Transportation Policy, Operations and Logistics Management.

Picture:  Boris Populoh


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