UPS Inc.’s (NYSE: UPS) financial services arm, UPS Capital, is piloting a program to help merchants reduce the risk of shipping to destinations with histories of package theft, pilferage and damage.

The program, called DeliveryDefense, was launched in July by InsureShield Shipping Insurance, the insurance arm of UPS Capital. Using UPS’ proprietary algorithms, the program allows merchants to assess the level of delivery risk associated with certain addresses in various regions. Merchants can then determine whether to divert packages to other locations or to purchase shipping insurance to protect against potential losses.

“By proactively identifying and addressing potential shipping issues, DeliveryDefense data ensures a smooth customer journey,” UPS Capital President Mark Robinson said in a statement. “Merchants can leverage alternative options, such as nearby UPS Store locations or other convenient access points, to optimize delivery outcomes.”

Generating “delivery confidence” scores, DeliveryDefense indicates to merchants a level of secure delivery for different addresses, UPS Capital said.

For high-probability deliveries, DeliveryDefense will suggest a successful delivery outcome to merchants. For a medium probability of successful delivery, the solution will give merchants optional access to shipping protection coverage for added protection. For a low score, DeliverDefense will direct merchants to alternative delivery locations, such as a pickup at the closest UPS Store location to the consumer.

The product is being bundled with UPS Capital’s insurance products and UPS’ access points network to suggest alternate delivery points, according to Archita Prasad, UPS Capital’s vice president of strategy, corporate development and new product innovation, who said merchants are responsible for paying the premiums should they buy coverage.

About 2% of all digital sales are subject to shipping loss, according to UPS Capital data.