Petroleum Marketers and Convenience Stores Insurance Tips - 5 Emerging Threats To Shield Against

1. Computer Fraud and Funds Transfer Fraud. Willie Sutton was once asked why he robbed banks, he responded "I rob banks because that's where the money is". With millions of dollars moving in & out of Petroleum Distributor bank accounts each week, Compromised Banking Credentials has rapidly emerged as a constant threat to Petroleum Marketers.

Example: The following scam originated in the Soviet Empire. It starts when the Petroleum Marketer employee inadvertently downloads malware on a company computer. Sensitive banking and payroll data is then intercepted with the "keystroke logging" malware. The perps then hire "Mules" by placing bogus online shopping job ads, who are then added to the payroll. According to the FBI, these cells criminals have stolen hundreds of millions of dollars from US business accounts.

2. Trade Credit Risk . A client once told me, "I never want to get in between a man faced with the difficult choice of either feeding his family, or paying his oil bill." Extending credit to dealers is a necessity to compete in the wholesale Petroleum Marketing business. Although many marketers require their dealers to furnish instruments of financial guarantee, such as (cash deposits, letters of credit, collateral, or personal guarantees), the industry is experiencing an increase in the severity of defaults.

How would single (AR) Accounts Receivable write-off, in the range of $ 50- $ 100K, affect your company? Assuming $ 3 per gallon on a typical 8,900 gallon load, each load represents $ 26,700 of AR. 3 loads from a dealer would amount to $ 80,100. At $ .05 margin per gallon, a marketer would need to sell an additional 1,602,000 gallons to make up for an $ 80,100 credit trade loss. If you or your lender is not comfortable with your current levels of outstanding AR, or if you would like to grow your business without the added credit risk, an affordable solution is to purchase AR Insurance. It's a great way to outsource and insure your credit decisions.

3. Pollution Liability. Prior to the mid 1980s, coverage for pollution liability was included on General Liability policies. Afer the (RCRA) and (CERCLA) acts were passed in 1976 and 1980, Insurance Carriers began excluding pollution coverage from the Property, General Liability, Auto Liability, and Umbrella policies. While some coverage may be endorsed back into the Property, Auto, and GL policies, today's Petroleum Marketers still have significant uncoovered environmental exposures and perils which would require an Environmental Impairment Liability policy.

While all Petroleum Marketers are exposed to varying degrees of pollution liability, operations with elevated levels of risk would include those with ASTs, Contractual Obligations from Leased Property, Contracting Operations such as Tank Installation or Repair, those Acquiring Property, Leased & Loaned Tanks, Recyclers , Automotive Service & Repair, HVAC Operations, Property Managers, and Transportation. Even releases from HVAC, Cooking, and Soft Drink equipment have led to pollution liabilities. EVERY PETROLEUM MARKETER HAS POLLUTION LIABILITY EXPOSURE.

Many of today's environmental coverage solutions are quite attractive in coverage and cost.

4. Cyber ​​Liability. The term Cyber ​​Liability includes Privacy Liability (personally identifiable information of customers and employees), Security Liability (failure to prevent spread or entrance of hack attack), First Party Cyber ​​Extortion (expenses to respond to threat and ransom payments if necessary), First Party Privacy Breach Expense (customer notification, credit monitoring expense, computer and legal forensic expense), First party business interruption and data recovery expense, Regulatory Defense and Penalty. Cyber ​​Liability also includes Libel, Slander, other forms of Disparagement as it pertains to your website, plus copyright infringement of material on your website.

Standard general liability policies exclude those cyber liability exposures, thus requiring the need to explore the purchase of Cyber ​​Liability coverage. A few examples of cyber liability claims would include: Customer credit card data hacked from a marketer's e-commerce site, HR file stolen which contained 250 employee SS # 's, your website transmits a virus to a customer, rogue employee steals copyright or trademarks from prior employer and inserts onto your site, data stolen from laptop, breach of non-disclosure agreement, and online advertising injury.

5. Tightening of Underwriting Guidelines for Marketers with LP Gas Exposure. Now, more than ever, the risk takers, or insurance carriers, want to verify that the following NFPA 58 guidelines are being followed: CETP Certified Employees, Annual Duty to Notify, Gas Checks on 100% of customers, and a written procedure for completing Pressure checks on EVERY Out-of-Gas call. For LP Gas marketers falling short on the above risk management practices, obtaining replacement coverage could have been more challenging than in years past. The realty is that LP Gas dealers, due to the durability of the product they sell, are held to a higher standard in the court of law. In addition to exposing employees and customers to catastrophic loss, non-compliance of these NFPA 58 standards has resolved in the insurance carriers non-renewal coverage.

ACTION PLAN: It's advisable that you complete a thorough risk assessment with a competent broker who understands the petroleum marketer and convenience store industry.

Source by Rick C. Craig