All road users will ben­e­fit from bet­ter in­sur­ance on trucks

The Witness - Wheels - - TRANSPORT -

AMENDED road leg­is­la­tion seems to call on all fleets to be in­sured for the cost of re­pair­ing road in­fra­struc­ture af­ter a crash, but fleet op­er­a­tors are more con­cerned with in­sur­ing their loads.

Nor­ton Rose Full­bright se­nior as­so­ciate Carol Hol­ness said at a transport sem­i­nar held last week in Dur­ban the new amend­ment was not be­ing en­forced, and there were many gaps in the “sloppy leg­is­la­tion” that would still be tested in court.

Nigel Pil­lay, head of cor­po­rate and business in­sur­ance at Stan­dard Bank In­sur­ance Bro­kers, said pre­vail­ing mar­ket cir­cum­stances were mean­while driv­ing the in­dus­try be­yond con­ven­tional ve­hi­cle in­sur­ance to­wards poli­cies that are writ­ten to man­age the risk on be­half of transport own­ers.

“Be­sides tra­di­tional com­pre­hen­sive cov­er­age, many own­ers are opt­ing to as­sume some of the risk them­selves to re­duce pre­mi­ums,” said Pil­lay.

“One of the most com­mon of these poli­cies are those that of­fer ag­gre­gate limit cover, which stip­u­late the most an in­sur­ance com­pany will pay for all cov­ered losses over a year.

“This en­ables the com­pany con­cerned to cap its pre­mi­ums at set level to the ben­e­fit of the trucker who as­sumes a fair por­tion of the risk.”

Pil­lay warned bro­kers the eco­nomic down­turn was mak­ing in­sur­ance cover ex­tremely price sen­si­tive. “As pres­sures to con­tain costs have mounted, so more cus­tomers are re­ly­ing on strong re­la­tion­ships with their in­surer or bro­ker to keep pre­mium and ex­cess costs in check.

“As con­trol of in­sur­ance pre­mi­ums is one of the costs that can be tai­lored or re­duced, it is usu­ally one of the first ex­penses ex­am­ined when op­er­at­ing costs have to be re­duced to main­tain mar­gins.

“Of course, one of the dan­gers is that val­ues and cover can be ex­ces­sively re­duced, which adds sub­stan­tially to costs if a ma­jor ac­ci­dent or dis­as­ter oc­curs.”

He warned clients that the con­ven­tional strat­egy of re­duc­ing pre­mi­ums by ac­cept­ing high ex­cess pay­ments con­tains sig­nif­i­cant risks for transport own­ers.

“They have to make sure that their cash flows are strong enough to carry the higher ex­cesses that need to be paid.”

Pil­lay said lack of in­sur­ance is a ma­jor prob­lem, with up to 70% of com­mer­cial ve­hi­cles, or seven in 10 trucks on South African roads, ei­ther hav­ing in­ad­e­quate in­sur­ance or no in­sur­ance at all.

Kathy Bell, a spe­cial­ist in transport so­lu­tions at Stan­dard Bank, told Wheels the vol­un­tary adop­tion of stan­dards, such as the Road Transport Man­age­ment Sys­tem, (RTMS) can make pre­mi­ums lower.

Bell said the RTMS has seen a large in­crease in mem­bers in the past year, and all the mem­bers are truck own­ers who have com­mit­ted their fleets to var­i­ous safety and qual­ity stan­dards.

But buy-in from each driver is key to the suc­cess of the sys­tem, she said.

Pil­lay said the present eco­nomic sit­u­a­tion adds fur­ther com­plex­i­ties to a transport in­dus­try that al­ready faces a myr­iad of risks when­ever a ve­hi­cle takes to the road.

“The fluc­tu­at­ing value of the rand means that the price of im­ported ve­hi­cles and the parts re­quired to re­pair them are con­stantly chang­ing. Most of this risk is as­sumed by in­sur­ance com­pa­nies.”

Most cat­e­gories of rou­tine in­sur­ance cov­er­age writ­ten in South Africa usu­ally in­clude: • Cov­er­age for goods in tran­sit; • Cross-bor­der cov­er­age for ve­hi­cles and loads trav­el­ling through sub-Sa­ha­ran Africa; • Third-party li­a­bil­ity; • Ac­ci­dent as­sis­tance that also cov­ers the cost of wreckage re­moval and en­vi­ron­men­tal dam­age caused by spilled loads that can range from oil and fuel to chem­i­cal spills; • Sas­ria in­sur­ance, which cov­ers ve­hi­cles and loads for dam­age caused by civil un­rest.

“Al­though these cat­e­gories seem to cover most even­tu­al­i­ties, the re­al­ity is that the in­dus­try is never free of risk — even when a ma­jor­ity of the fleet is parked in a con­trolled area.

“Ad­di­tional haz­ards like fire can re­duce a multi-mil­lion rand fleet housed in a se­cure site to ashes,” said Pil­lay.

Risks only in­crease when ve­hi­cles take to the roads and face haz­ards that can vary from in­clement weather to crime and the fact that many driv­ers do not have the req­ui­site skills re­quired to han­dle large rigs.

Al­though telem­at­ics are play­ing a role in re­duc­ing haz­ards by closely mon­i­tor­ing driver be­hav­iour, abuse of ve­hi­cles and fraud­u­lent ac­tiv­i­ties, in­sur­ing South Africa’s heavy fleets — the lifeblood of the econ­omy in the ab­sence of an ef­fec­tive rail net­work — will al­ways re­main a chal­lenge, said Pil­lay.

“In­sur­ance com­pa­nies and re­spon­si­ble truck op­er­a­tors are play­ing their part in the equa­tion by work­ing to­gether to iden­tify and im­ple­ment strate­gies to re­duce risk and there­fore the costs of op­er­at­ing a fleet. The ben­e­fi­cia­ries of these ac­tions are not only the par­ties in­volved, but South African con­sumers as a whole, who rely on these ve­hi­cles for many of the goods and ser­vices that are taken for granted,” said Pil­lay. — Wheels Reporter.


In­sur­ance com­pa­nies and re­spon­si­ble truck op­er­a­tors are work­ing hard to re­duce in­ci­dents like these on the N3.

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