Deteriorating infrastructure piles up insurance bills

Deterioration of roads in South Africa as well as the rest of the continent is raising increased concern for the marine insurance sector which has seen a growing incidence of claims related to poor infrastructure – particularly potholes. And thanks to abnormally heavy rains, the problem appears to be getting worse rather than better, says Associated Marine chief operating officer Mike Brews. While road and rail policies cover domestic as well as overborder cargo, the majority of cargo is moving into Africa. “And there the key focus is always the type of commodity, its vulnerability and the risk profile of the country into which it is moving. “Zimbabwe, for example, is always a concern for us and that translates into higher premiums and/or higher excesses.” Volumes have been fairly consistent, says Brews, with business beginning to pick up at the end of last year. Truck hijacking, however, continues to dominate the claims list. “Cover is only provided if satellite tracking has been installed, with armed response, driver checking and all the things that a prudent insured would require to protect their cargo in place,” says Brews. “It doesn’t stop hijackings but advances in satellite tracking ensure that the recovery action is a lot quicker.” Loss ratios have been fairly good over the past year, according to Brews, but there has been a proliferation of insurance players in the sector. “With everyone fighting for their patch of earth, the rates reflect it.” But in a competitive environment, rates are just a part of the equation. “At Associated Marine a lot of time is spent educating our clients. We believe the more educated the client is, the better he understands what he’s buying so he’s likely to buy the right product at the right price that will suit him – and that results in far fewer comebacks and cements the relationship between insurer and insured.”