As the trucking industry increasingly seeks to reduce costs, fleet owners are tempted to reduce their insurance premiums and assume some of the risks themselves. But this means that up to 70% of commercial vehicles on South African roads either have inadequate insurance or no insurance at all.
So said Nigel Pillay, head of corporate and business insurance at Standard Bank insurance brokers, pointing out that this came at a time when owners were seeking innovative options to reduce operating costs caused by rising fuel and maintenance costs, as well as competition for loads.
He pointed out that aside from traditional comprehensive coverage, many fleet owners were opting to assume some of the risk themselves to reduce premiums. “One of the most common of these policies is those that offer aggregate limit cover, which stipulates the most an insurance company will pay for all covered losses over a year. This enables the company to cap its premiums at a set level to the benefit of the trucker who assumes a fair portion of the risk,” Pillay commented.
He cautioned that while it was tempting for fleet owners to reduce costs by accepting lower premiums with high excess payments, this strategy presented “significant risks” as the transport owners had to make sure that their cash flows were strong enough to carry the higher excesses that needed to be paid.
“These actions, when not properly considered, contribute to one of the major problems facing road users across the country who do not realise that up to 70% of commercial vehicles on South African roads either have inadequate insurance or no insurance at all,” said Pillay.
The voluntary adoption of programmes such as the Road Transport Management System (RTMS) – that commits a truck owner to the adoption of various safety and quality standards – could result in decreased premiums, he added. .
