Jewellers Block Insurance and the Pre- Risk Survey

Jewellers Block Insurance and the Pre- Risk Survey

What is Jewellers Block and who might purchase this insurance? Jewellers Block Insurance relates to insurance cover provided for the following: Retailers Wholesalers Manufacturers Pawnbrokers Private collectors

What is a Pre- Risk Survey? A pre- risk survey is a survey commissioned by Insurers/ Underwriters before they agree to accept a risk or acceptance of a risk may be dependent upon a satisfactory survey. The survey is a risk assessment of the Insured s business conducted by an independent third party.

Overview of the Policy Coverage Items insured and sums insured Conditions precedent Exclusions

What cover is provided to a retail jeweller by a typical JB policy? Coverage is generally on an All Risk basis. This Policy insures against all risks of direct physical loss of or damage to the property described herein occurring during the period set out in the schedule subject always to the definitions, limitations, exclusions, terms, conditions and warranties of the policy.

Items Insured Insured property will typically include: Stock Cash FFF/tenant s improvements There may also be cover for: Exhibitions Entrustments Sendings Home risks

In addition to the sum insured for stock, there may be limits in the policy for: The maximum value of an individual item Maximum values for items in window displays Maximum values for goods out of safe/in safe out of business hours Robbery/hold- up Smash and grab

The principle item insured is Stock and the principle peril is theft. An example of a definition of stock is property: (i) Owned by the named Assured; (ii) Delivered or entrusted to the named Assured by others; But comprised only of pearls, precious and semi- precious stones, jewels, jewellery, watches, watch cases, movements, parts and attachments, gold, silver, platinum, other precious metals, stainless steel and alloys and other property usual to the conduct of the jewellery business insured hereunder

Conditions Precedent Common requirements are: Details of record keeping Frequency of inventory counts Protection devices and systems should be operational Maintenance agreements shall be in force and systems tested There shall be no changes to any protection systems without Underwriter s approval All alarms to be activated when the premises are closed for business Display cabinets and showcases to be closed, locked and the keys removed at all times except when items are being placed into or removed therefrom Keys to cabinets to be removed and kept on an approved person/in a safe Codes/combinations for safes, strong rooms and alarms not to be written down No duplicate keys to be left on the premises out of business hours Value of stock in shop windows/display cabinets not to exceed set amounts Protocol and procedures in the event of consignments to Third Parties In the event of a loss immediate notification shall be made to the police, Underwriters and due measures taken to protect the property from further loss or damage

Common exclusions Examples are: Loss or damage by theft or dishonesty or deception committed by any servant or traveller or messenger in the exclusive employment of the Assured Goods found to be missing at stocktaking in respect of which no claim has been previously notified Loss of or damage to property insured whilst being worn or used by the Assured, any Principal or any director Loss of or damage to goods whilst at an exhibition or any trade show Theft of insured property from a vehicle owned by the Assured or his agents/ representatives, whilst the vehicle is unattended Loss of or damage to goods whilst being transported by courier, armoured car, post or similar Loss of or damage to goods whilst entrusted to clients or customers Unexplained losses or disappearances

Why might an underwriter request a pre- risk survey? A survey will generally be commissioned when: New Risk: typically following completion of the proposal form Underwriters might require a pre- risk survey if: i. The values declared on the proposal form are particularly high ii. There are multiple locations iii. There is a statement or declaration in the proposal form that gives cause for concern Renewal of an Existing Risk: typically following a loss or series of losses during the previous policy period

To be the eyes and the ears of the Underwriter Pre- risk surveys generally focus the risk of: Theft Burglary Hold- up Smash and grab Sleight of hand Fire

Communication with the Insured It is key that the Insured understands the purpose of the survey: The survey is not an exercise in finding fault The survey is designed to identify and remedy any weaknesses in the physical protections and the procedures in place in order to improve the risk, which should ultimately benefit the Insured

Reporting Scope and Format Whether the reporting format is a tick box or a narrative text, the emphasis throughout the survey should be to: Identify risk and Wherever possible seek to control/limit risk Taking into account relevant practicalities such as costs and Seeking to improve areas, such as record keeping, that could form the basis of a dispute in the event of a claim If it is not possible to eliminate the risk the focus should be on seeking to control the risk

The report should include: Narrative text Photographs Floor plans showing the relevant security features Copies of maintenance contracts

Areas to be Covered The survey should concentrate on three areas 1. Physical features 2. Procedural considerations 3. Human angle

1. Physical Features Start from the outside and work inwards, always seeking to place yourself in the position of the would- be thief. What type of area are the risk premises located in? Where is the nearest police station and fire station? How far is the alarm monitoring station from the risk premises? What are the surrounding premises used for? Are any premises empty?

1. Physical Features Look at the layout of the premises and in particular look at: Shop front Glass type and thickness of display windows Door access control Display windows and showcases External and internal doors and locks Safes Strong rooms CCTV system

1. Physical Features Intruder Alarm system which should include: 1. PID (Passive Infrared Detectors) 2. Alarm Contacts fitted to doors, windows and safes 3. Vibration Detectors fitted to doors, windows, safes and walls 4. Connection to an alarm monitoring station, police station or mobile phones 5. SMS messaging system 6. Panic buttons 7. External sirens 8. External flashing lights

2. Procedural Considerations Start at the start How does the working day start and finish in the business? Procedure for opening and closing Key control Codes and combination locks Is there a separate code to be used in the event of coercion? When are codes changed? What is the process for removing stock from safes and checking that all stock is present?

2. Procedural Considerations What is the procedure for returning stock to safes at the end of the working day and checking that all stock is present? What is the process for recording incoming stock and sales? How often are inventory counts undertaken? How often is this audited? Are any items left in display windows out of hours? What is the procedure for shutting the business during lunch break? Maintenance agreements in place with alarm/cctv manufacturer?

3. Human Angle There are two issues to consider: 1. Concentration of responsibilities/power in one person making them vulnerable to coercion 2. Concentration of responsibilities/power in one person to the extent that they are able to perpetrate a fraud alone

3. Human Angle Such a scenario usually occurs with responsibility being vested in one trusted employee, normally a store manager. The key areas to look at are: Who has keys for roller shutters, external doors, internal doors and safes? Who knows the alarm codes? Who knows the combination codes to safes? Who is responsible for checking stock at the end of the working day when it is put into the safe and vice versa? Who is responsible for undertaking internal inventories?

3. Human Angle The key points to focus on are: Each activity should involve at least two people and; No one person should be able to undertake all activities without the involvement of another person. Just because someone has worked for the Insured for many years does not mean that they are immune to temptation.

The Recommendations Always discuss and agree any proposed recommendations with the Insured. Key points relating to recommendations: They should be practical They should be economic They don t have to be complex There is no shame in not making any recommendations!

Common Issues Familiarity breeds contempt reluctance to implement certain recommendations because it has never happened before The economic argument PIR detectors that do not work Damaged CCTV cameras CCTV footage that is not recorded Access codes for alarms that are not changed, even when a member of staff leaves Concentration of responsibility in one employee Failure to correctly declare aggregate maximum values at risk/maximum value one item Keys left in cabinets

Common Issues Misunderstanding of the terms strong room. UL 608 is the industry standard relating to burglary resistant doors and modular panels. Class M is the minimum standard and provides 15 minutes of protection against attacks using cutting tools, cutting torches (not explosives). The minimum construction includes: 1. Reinforcement on all 6 sides 2. With 12 of poured concrete 3. With 6 rows of reinforced bars 4. 3 in centre

Risks Written Overseas Many JB risks are written out of the London market. A common problem encountered is Underwriter expectation against reality. Shop fronts and doors Multiple items removed from cabinets at one time Cash driven businesses Adequacy of record keeping

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