For several years now we have read predictions for a cashless society where transactions are made by mobile phone, by clicking a mouse or by utilising a keyboard. We have seen business's move from physically handling cash payments to dealing with them in an electronic form, none more so than the tap and pay technology on your personal debit or credit cards and with mobile wallets utilised via your smart phone or iPhones.
Experts argue that the rise of digital payments does not signal the end of cash and it is still the most commonly used payment method in most countries. There is very little hard statistical data available but reports indicate that cash remains the most popular method among consumers in terms of volume of transactions for low value payments.
While not as rapid as one might expect improvements in alternative payments systems, the rise of
e-commerce and the digital economy has led to a steady increase in the use of non-cash payment systems. Despite this there has only been a moderate decline in cash payments used. There is still a demand for high value notes. The €500 note accounts for over 30% of the value of cash in circulation in Europe although it is not commonly used as a payment instrument. In the USA $100 bills now account for almost 80% of the value of banknotes and in the UK £20 notes make up a large proportion of the cash in circulation.
This brings about several questions covering many areas of specie insurance; for many years we have seen cash in transit companies suffer from losses due to accounting errors, none more so than the introduction of the Euro, whereby several firms suffered losses following the intake of old European currencies. This being a loss to those companies but not of a physical nature or of the physical cash.
On a different but widely related note, we have recently seen cyber related attacks on ATMs effecting both Banks and ATM companies. These losses are quantifiable events, but would not have been contemplated a few years ago when Specie insurers were first writing these policies. In fact the insurers were far more in tune to consider the criminal simply using a sledge hammer or a truck to attack an ATM or group of ATMs.
Businesses realise that electronic solutions such as Smart Safes and Cash Recycler Solutions can bring down costs and reduce risks especially since there is no need to count, transport or store large amounts of physical cash on their premises.
With a changing world of technology and increased cyber events the challenge to the specie community is how we do more to assist our customers in order to offer them the protection they need whilst considering the risks that are undoubtedly changing.
We have recently seen the Lloyd’s Market look to clarify its position with regards to the specie cyber exclusion contained within the policies its underwriters offer. With the understanding being if the physical asset is physically removed following a cyber event, this will be considered as theft.
However, we at JLT Specialty feel there is scope to further increase the coverage available. We continue to drive and challenge the specie insurers to adapt to the changing customer needs with the objective to match the clients risks with the insurance coverage required for the alternative methods of payment along with the more common physical cash exposures.
Through a consultative collaborative approach with our crime and cyber colleagues we continue to advise our customers of these ever changing risks in order to provide customers with creative solutions matching their changing needs.
For further information, please contact Barry Vickery, Senior Partner, Fine Art, Jewellery and Specie on +44 (0)20 7528 4598 or Inge Varvel, Senior Partner, Fine Art, Jewellery and Specie on +44 (0)20 7466 6248