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Transport Insurance – A new approach

Vehicle insurance has traditionally made up a material portion of any business insurance costs. These costs are not limited to pure insurance payaway, but includes associated costs such as risk management and security, as well as consequential costs such as loss of income.

Insurance is seen as a grudge purchase and fleet owners do not often see this cost as adding any value to their business. In an effort to change these perceptions, the Indwe Transport Hub is in the process of developing a risk and insurance package to address the negative aspects mentioned above. 

Firstly, it is important to understand that not one client’s risk profile is the same and, as such, a one-size-fits-all insurance solution is not going to be in the client’s best interest. 

Premium payaway is definitely the client’s biggest gripe, and is where one should start with an analysis. This would include a review of all types of insurances, including goods in transit risks, commercial office and liabilities. Depending on the size of the fleet, claims history and risk appetite of the client, the use of alternative insurance structures will often result in substantial premium savings. The obvious options are:

  • Profit share arrangements
  • Deposit premium arrangements
  • Funds
  • Aggregate Excesses
  • Self-insurance

The common benefit to the client with all the above structures, is the fact that they receive a direct reward if there is an improvement in the frequency and severity of claims incidents. At the same time, this can be achieved without compromising the client’s risk exposure. Determining the best option for a client requires a thorough understanding of the business, as well as access to detailed fleet and claims information. 

These alternative structures are not commonly offered to operators. The reason for this is twofold. Firstly, most of these structures come with a reduction in broker commission. Secondly, not all brokers have the specialised knowledge required to present these structures to clients. This creates an obvious opportunity for Indwe branches to make a difference to existing and new clients.

An essential element to ensure a successful outcome in the above structures, is the effective use of risk management tools. The investment in risk management will have a proportional influence on the eventual return and benefits that the client will earn in the future. For this reason, insurers must include risk management solutions that will allow for the measurement and management of critical areas of an operator’s business. The obvious example of this would be the monitoring of driver behaviour through the use of telematics and behaviour reporting. The direct involvement of Indwe staff in the implementation and monitoring of these reports, will provide the client with valuable support in the managing of his risk. 

One of the biggest costs to an operator at claims stage, is the resultant cost of the loss of use of the vehicle. Reducing this cost would require an improvement in the claim turnaround time. To achieve this would require the contribution of all third parties involved in the claims cycle. Those parties involved include:

  • Clients –  reporting of loss
  • Tow-in
  • Assessing
  • Storage
  • Repairers
  • Insurers
  • Third Party Legal Assistance

By contracting with selected providers and agreeing on service levels, the turnaround time can be significantly reduced and lower average cost of claims can be achieved. The management of the claims process can be efficiently handled through the use of the Indwe-owned Lymlyte system, through which important claims information is automatically gathered and made available to policyholders and insurers. 

A further element of net claims cost, is the treatment of third party recoveries and defences. As per the above supplier panel, legal service providers will be selected to aggressively pursue recoveries and defend responses. 

To achieve all this, Indwe will need the support of selected insurers that recognise the potential benefit to all parties. Indwe will also need suitably trained and qualified staff to handle leads in such a way as to convince clients about the benefits of appointing Indwe as their broker. This provides an exciting opportunity for Indwe staff who like a challenge. The role of the Indwe Transport Hub will be to provide the necessary training and support for branches to take advantage of this opportunity. 

Never before has the economic climate been so ripe for the introduction of a risk and insurance solution that is guaranteed to save businesses money and improve operational efficiencies. In an ever reducing pool of clients, brokers will need to show these policyholders a clear differentiator in the way that their accounts are handled. Indwe has an opportunity to do exactly that.

Indwe Risk Services has a specialised automotive and transportation division that can assist clients with an examination of their current Insurance program. Given the current state of the South African economy and the lockdown impact, every operator will need to ensure that their insurance premiums and policies are structured as cost effectively as possible. If there are any questions regarding the contents of this article, please contact Steve Cornelius on 012 471 1000 or email stevec@indwe.co.za.