With more than £1m of plant and equipment stolen every week in the UK, Sam Barrett asks what the industry is doing to bring security measures to the surface
More than £1m of plant and equipment is stolen every week in the UK and, although a 50 ton piece of kit - often in bright yellow livery - may not seem the easiest thing to pass on, less than 5% of plant stolen is recovered.
"Some plant theft, particularly for smaller items such as compressors and quad bikes, is opportunist but the majority is carried out by organised criminals," says Tim Purbrick, manager of The National Plant and Equipment Register. "We suspect that as much as £50m a year raised through plant theft is going into serious crime and there's also evidence of links to the funding of terrorist groups."
Lax security makes it relatively easy to steal too. Most bits of kit can be started with a universal key and few are fitted with security devices such as immobilisers and tracking systems. On top of this, there is often little security on the site to prevent thieves gaining access.
In spite of its size, plant can be relatively easily passed on. Without a formal registration system, many pieces of equipment are circulated around the UK but some plant will be shipped outside the country, with the Republic of Ireland, Middle East, Africa and Australia possible destinations. It may also be broken down for parts or used to perpetrate further crimes, such as the removal of cash machines or theft of other items of plant.
Furthermore, with the majority of plant stolen overnight, at weekends or during holiday periods, it can be long gone before anyone is aware it is missing, making the chances of recovery slim. "The main problem is that plant theft isn't a high priority for anyone involved, whether they're manufacturers, owners, users, the police or insurers," says Mr Purbrick.
Lack of security incentives
From a manufacturer's perspective, there is little incentive to increase the integral security on plant. Buyers are not prepared to pay extra and manufacturers do not want to lose business with inflated prices to reflect the additional security measures.
Paddy Lynch, group sales manager at HSB Engineering Insurance, explains: "An excavator may cost more than a BMW but while the BMW will have a range of security including an immobiliser and an alarm, a 12-year-old thief could easily start up the excavator."
He believes that manufacturers are not interested in changing security measures because a large part of their income comes from replacing stolen plant. Mr Purbrick adds that while some manufacturers, including Caterpillar and Kubota, are supportive of TER's initiatives to reduce theft, there are plenty of manufacturers that could do more.
There also appears to be scant interest in rectifying the situation from plant owners - of which around 80% are plant hire companies - or end users. "There's a huge difference between the plant and motor markets," explains Mr Lynch. "While motor vehicles are usually driven by their owners, it's the employees that drive plant or the person who has hired it."
Compared with other crimes, this problem remains low profile for the police too. Without targets for plant theft reduction and clear-up rates, there is little incentive to increase staffing or other resources in this area.
Logic would dictate that the one group likely to be concerned about high theft and low recovery rates would be equipment insurers. However, some of the same disincentives that apply to manufacturers seem to be impacting on the action of insurers too. "Insurers don't want to lose business," says Mr Purbrick. "If one decides to set its security requirements higher than its competitors then it risks losing its book of business. This isn't something that's easily stomached because plant will often be just a small part of the business written alongside employers' and public liability."
The Home Office, however, wants more done to address this problem. Last year it produced a voluntary code of practice for manufacturers and wrote to insurers in September recommending that they set minimum security standards for insurance. These standards would require insurers to insist on minimum levels of equipment security before they could offer cover as well as requiring all insured equipment to be registered with TER to make it easier to identify any stolen plant.
Insurers have resisted the introduction of these standards, although many will take TER registration into account when pricing risk. All seem to be willing to offer some form of discount or incentive for additional security. For example, HSB Engineering Insurance offers excess-free cover for some types of security systems, such as immobilisers and tracking devices, and will pay for the replacement of security systems if they are damaged in an attempted theft. Additionally, discounts of up to 35% are available when these security devices are in place. "General site security is also important but with so much equipment hired, insureds will often have no control over this so it can't be reflected in the premium," says Mr Lynch.
Norwich Union also offers a discount of up to 40% where immobilisers and tracking devices are fitted but finds that few policyholders take up this opportunity. "It's a substantial discount but the cost of these security devices isn't always immediately offset by it," says Gary Thom, senior underwriter at NU.
While they are happy to offer discounts, insurers have stopped short of introducing industry-wide security standards, with many arguing that taking this approach would create a cartel that would fall foul of the Competition Act.
Registration with TER is, however, regarded as a positive step and warrants a discount with some insurers. For example, Allianz Cornhill Engineering launched an initiative with TER in May this year to help improve the take up of plant registration, offering a discount of up to 15% and free membership for the first year for policyholders registering with TER. "We stopped short of making registration a condition of the policy," explains Stefan Bramwell, construction underwriting manager at Allianz Cornhill Engineering. "Registration of plant is only one part of the plant security jigsaw."
Mr Bramwell adds that he has seen other security measures being taken that have improved risk. "We try to ensure our clients have considered overt and covert marking, the use of physical security devices, improvements in depot security and that they have a comprehensive plant security policy," he says. "We'd also assist our clients in their plant security. Our team of surveyors are able to discuss the best security measures available that will protect the plant at the most effective cost."
NU also encourages registration and offers a discount of 5% for those policyholders who elect to commit to this but the impact of such financial incentives is not having the effect that might be expected. "The costs of registration are negligible but we don't see a massive take-up," says Mr Thom. "The concern is over the finder's fee, where TER takes 50% of the value of any recovered equipment. This is especially a problem if plant owners self insure any of their equipment."
Despite the apparent reluctance of insurers to insist on industry-wide minimum security standards and compulsory registration, there is support for the work being carried out by the Plant Theft Action Group. A sub-group of the Home Office's Vehicle Crime Reduction Action Team, the PTAG is made up of interested parties including representatives from the police, plant hire companies, contractors, manufacturers and insurance companies.
As part of its remit to help plant owners reduce the risk of theft, it has promoted the use of unique key operation and the introduction of 17-digit identification numbers to help identify plant. It is currently turning its attention to a registration scheme for new plant that it hopes will go live sometime next year. The scheme, which was originally suggested by the Metropolitan Police, will require all new plant to have a unique registration code so that it is easily identifiable and can be traced.
Kevin Clancy, managing director of Clancy Dowcra and chairman of the PTAG, explains: "Each piece of new plant will be given a registration number in the form of ABC123, of which there are a couple of hundred thousand permutations. This will then allow the item to be identified and it will lead to higher recovery rates because whoever holds the register will work with the police. There will be a cost involved but this is likely to be small."
Registration scheme drawbacks
Currently, there are several places where plant can be registered, including TER and a voluntary off-road register held by the Driver and Vehicle Licensing Agency, but neither register is perfect. With TER, some plant owners see the finder's fee as a deterrent to register while the fact that the DVLA option does not cover all plant - for instance, a mini-excavator would be covered but not a compressor - discourages owners from registering.
Although the PTAG scheme would also be voluntary, it is expected that market pressure will effectively force all new plant to be registered. "We can't make the registration scheme compulsory but it could certainly be best practice," says Mr Clancy. He also expects to see some companies make registration a condition for contractors. "Someone like Transport for London could insist on registration, which will put a lot of pressure on other organisations," he adds.
Additionally, the building work required for the 2012 Olympics is being suggested as a useful test site for the scheme. Concerned that the scale of the site will make it an easy target for plant theft, the Metropolitan Police has suggested that all plant, including any manufactured before the registration scheme was introduced, is registered for ease of identification.
While this should help reduce theft, as well as potentially keep out rogue plant users, Mr Clancy says the PTAG has resisted a call to register older plant too. "There's not a lot to be gained by doing this retrospectively," he says. "Most plant has a three to five-year lifespan so between 50% and 70% of all plant will be registered in five years' time."
Certainly, insurers are confident about the scheme's potential for success. "We welcome this initiative," says Mr Thom. "We expect it to have a positive effect on the level of theft, not only deterring it but also enabling stolen items to be returned to owners."
Mr Bramwell also believes it will deliver the desired effect. "Funding the scheme through plant registrations and pre-purchase checks will remove the need for a finder's fee for recovered plant, which will dramatically increase the number of companies that register their plant," he says.
Although it has been well received by the insurance industry, some details of this new initiative are yet to be finalised. "The scheme has gone out to tender with the data handlers, although we should have a decision on this in the next six weeks," Mr Clancy says. "Providing this goes ahead, it should be in place by next April."
In spite of this element of uncertainty, support among insurers remains firm. "This type of scheme is needed and there's a strong desire to implement it too," says Mr Thom.
A change to the insurance cycle could also shift the way insurers view plant and equipment. At the moment, it is a relatively profitable area of business and the insurance market is soft but there are indications things will be different in the near future. "The motor insurance market is hardening and this is usually the first to move," says Mr Lynch. "In a hard market it'll be much easier to apply conditions, encourage greater use of security and be more selective about risk. This time next year, the plant insurance market will be very different."
- Zurich settles two claims from Westminster terror attacks
- Over 20 start-ups pledge support for proposed insurtech trade body
- Amanda Blanc makes first appearance as ABI chair
- ERS owners explore potential sale
- Customers in line for compensation as UK broker fails
- Insurance firm director jailed for 31 false claims and Manchester Arena terror attack fraud
- Zurich CUO takes on RSA UK role