Complex global supply chains are making stock throughput (STP) policies increasingly relevant after interest has previously fluctuated, Berkshire Hathaway Specialty Insurance (BHSI) says.

STP cover involves a single policy for goods from the time they are manufactured, and sometimes before in the case of raw materials, through to their final destination. The cover includes periods when goods are at warehouses, in transit and at distribution centres.

The coverage has been available since the 1950s, with its popularity ebbing and flowing, often following market cycles, but the sophistication of the modern supply chain highlights their value, the insurer says.

Marine Underwriter at BHSI in Australia Anouk Sireude says an STP policy can provide a simpler and more efficient insurance cover through the supply chain.

“Compare that to the alternative, when goods are insured by a local ISR (industrial special risks) policy while in stock and by marine cargo cover while in transit,” she says in an article.

“The risk switches back and forth, numerous times, until the goods are sold and reach their destination. Structuring coverage can be tedious, inefficient, and complicated by the unique jurisdictional and local coverage issues along the journey.”

Ms Sireude says supply chains are increasingly complicated by factors such as contract manufacturing and with large logistical companies integrating into the mix.

STP cover is best suited for insureds whose products move relatively rapidly through the supply chain, such as in a 12-month period