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