24 RISK 31 May 2017
RISK
Knowledge is key to reducing risk and costs
The better trucking companies and their insurance brokers understand risk , the better the insurance cover that they can secure – which is why Hollard insists on knowing its trucking clients well .
The failure of rail transport services , substantial increases in the cost of spare parts and unit prices linked to the exchange rate are putting huge pressure on trucking insurance , says Grant Carstensen , Head of Business Development at Hollard Broker Markets ’ Trucking Centre of Excellence .
Coupled with that is intense competition among insurers , he says : “ We are all undercutting each other in order to gain market share .”
Turning to loss ratios , Carstensen says , one of the main factors is drivers – who make mistakes “ and do everything that they shouldn ’ t ”.
That said , Carstensen says it is important to take time to understand drivers and what affects them : the pressure placed upon them to perform , poor driving habits , unfamiliar routes , unfamiliar vehicles , driving at night , their health and the condition of their vehicles .
“ The reality is that these gentlemen are pushed hard , day in and day out ,” he says .
Hollard , therefore , examines the circumstances around their coverage when deciding on cover : “ We want a deeper understanding of all of the factors affecting the insured ’ s risk ”
Transport companies are often only interested in keeping wheels turning , and not in identifying and managing risk – which is then the job of the broker , who needs to understand the client , the client ’ s ever-changing risk profile and financial challenges involved . In other words , the broker must gain a full appreciation of the client ’ s situation – and central to this is understanding driver error and its route causes .
“ The first thing that clients do when they can ’ t afford it , is to stop their insurance ,” he said . This then affects overall loss ratios .
Recovering from third parties is also a challenge for insurers , who are “ happy to accept a 70-80 % recovery rate ” because settling is preferable to bearing further costs such as litigation . But the financial implications are high – insurers can easily bear a R3- to R4-million loss per truck accident .
Positive trends include telematics – but only if transport companies don ’ t undertake monitoring themselves , and are interested in playing a strong role in its implementation ; and the installation of video cameras on trucks , which proactively assist with recoveries and help to monitor driver behaviour .
“ The problem [ with cameras ] is that some owners adopt the stick approach , and not the carrot ,” says Carstensen , adding that transport companies should use cameras to educate their drivers and understand them better , instead of as a mechanism used simply to catch them out and “ whip ” them for infractions .
A third positive trend is “ recovery assist ” technology , which works best when thefts and hijackings are reported within two hours of their taking place . It is imperative that trucking clients are advised to provide quick notification of incidents .
Ultimately , Carstensen said , insurers must educate brokers to guide their clients with respect to best practices – and this rather up front at the underwriting stage than after a loss has occurred .
Need insurance cover for social media slip ups ?
There are several cases of South Africans posting comments on various social media platforms that they believe are innocent , but which have been deemed inappropriate and offensive by the public . With this in mind , Acuideas and their client SHA Specialist Underwriters have developed a social media liability cover product – the first of its kind in the country .
The Social Liability Insurance Policy ( SLip uP ) is a product that consumers can purchase to cover the legal fees and damages associated with defending themselves against allegations of privacy invasion or defamation of a third party via social media .
“ People can quickly find themselves in trouble for their comments on social media ,” says Sujeeth Bishoon , Executive Head at Acuideas . “ Not only do these comments cause embarrassment , but in some cases they can have devastating consequences in the person ’ s personal and professional life . For this reason we recommend that brokers talk to their clients about a Social Liability Insurance Policy .”
SLip uP is aimed at individuals and their children , and it covers the legal costs of a person defending themselves against potential defamation suits and the settlement fees if the case is lost . There are specific exclusions where the policy does not cover defamatory or offensive comments that relate to race , religion or culture .
Children are often unaware of the consequences of their actions on social media , but with SLip uP , parents can cover these actions . There are also cases where a person is not the originator of the content , but has shared or liked the post , and they can be held accountable for their endorsement .
“ As communication evolves , it forces the insurance industry to do the same and this is why Acuideas dedicates significant resources to product development . While everyone should realise there are serious consequences to their actions on all social media platforms , this liability insurance gives peace of mind that you are covered when you slip up ,” says Bishoon .
SLip uP is only available through SHA brokers . It can be purchased as an add-on to an existing domestic portfolio . The product is available for R10 a month , with cover of up to
R500 000 a year .
Grant Carstensen , Head of Business Development , Hollard Broker Markets ’ Trucking Centre of Excellence