Getting transport insurance into gear

Getting transport insurance into gear | Insurance Business

Getting transport insurance into gear

In a field like transport and motor, where claims are frequent, it’s essential for brokers to have access to an insurer that provides reliable and consistent claims service. Jamie Craig, motor fleet underwriter at Zurich, says it’s crucial to give brokers confidence that their customers will receive the service they need.

“Every customer is different,” he says. “They require different types and limits of cover, so brokers need to be working with insurers who are flexible with their wording and open to understanding what that particular customer needs. In turn, they should be able to customize or endorse their respective policies to suit that customer.”

This isn’t something that’s limited to contracts, paying claims and other transactional aspects of insurance, Craig adds. Part of working with an insurer means having access to education around risk exposures, which reduces the need for claims in the first place.

“The idea that insurance is just about paying claims has been outmoded for decades now,” Craig says. “Customers pay premiums in the event that something does go wrong – but ideally nothing would go wrong in the first place. Brokers should be working with their clients to reduce claims and operating costs and lift overall safety standards, but they obviously need an insurer that can provide them with the information they need.”

Accordingly, he adds, a strong risk management proposition is a key feature brokers should look for in an insurer – especially for clients with more complex requirements. 

Great expectations

The good news, Craig says, is that clients in the motor space are also adjusting their own expectations and demanding higher standards from brokers and insurers.

“The transport industry is vital to the Australian economy,” he says, “so it’s essential to get vehicles back on the road as quickly as possible. We see our role as instilling confidence in brokers’ customers – they’ll have our backing in times of need; we can help them get back on their feet and allow them to confidently run their business. Support from our risk engineers also assists customers in developing quality risk management programs, which in turn help develop best practice.”

At the same time, expectations of clients have also shifted; new COR laws have put an onus on each transport operator to ensure they meet the requirements. As the transport industry becomes more heavily regulated, Craig stresses that it’s vital for transport companies to have the appropriate coverage in place – and to meet or exceed any other legal requirements. Fines of up to $300,000 for individuals or $3 million for companies can apply for breaches to COR laws.

“Brokers need to be speaking with their transport customers about things like strong fatigue management, strict driver controls, vehicle standards and safety management systems,” Craig says. “Investment in driver training programs, vehicle maintenance – including a strong procurement policy – and the utilization of technology, including telematics, is becoming the norm in the transport industry.”

Companies that don’t conform will find themselves under the microscope of investigators and face potential fines and grounding of their fleets, Craig says. Those that are willing to invest are likely to benefit in the long run with insurance premium savings, lower longterm operational costs, improved productivity and a better safety record.

“From a cost perspective, this is a significant investment,” Craig says. “Transport operators are likely going to feel the pain in the short term – but operators and their management who drive operational change and utilize emerging telemetry and other technology will reap the rewards. Brokers need to have these discussions with clients to keep them top of mind.”

Future trends

There’s no doubt that the motor and transport sector is in a state of a flux at the moment. Business goals are often dictated by increasingly tight margins and stricter regulations, requiring companies to deliver under previously unknown levels of pressure.

But Craig still sees insurance as a means for customers to holistically support the health of their business. Combined with the growth of technology within the industry, there are numerous ways operators can maintain standards and adhere to legal requirements, all while working to improve margins and profitability. 

“We’ve seen a big uptake in telematics,” Craig says. “There’s a wide range of benefits, including fuel savings, monitoring driver behaviour and efficient route planning via devices such as Smartrak. As well as driving efficiency, technology is also transforming safety through tools like Seeing Machines.”

However, one trend that does raise concerns for Craig is the shortage of drivers. The demand for domestic freight transportation is increasing, but more must be done to attract new drivers to the industry.

“I’d say there are a few main causes – licensing restrictions for young drivers and incorrect preconceptions about the transport industry,” he says. “Additionally, drivers understandably expect that their employers are investing in their safety. Companies that aren’t delivering to best-practice standards will struggle to attract quality drivers.” 

There are real-world consequences for current drivers, too. The shortage is putting greater load on them; Craig describes this pressure as a “key link” in the growing number of fatigue-related crashes in Australia, currently estimated to be at around 30% of all fatal road crashes.

But how can the transport industry address this challenge? Craig feels the answer might lie in autonomous vehicles. Current testing in the US, he explains, has estimated potential savings of up to 40%. Completely autonomous trucks operate under a ‘platooning’ arrangement, whereby a wireless convoy of trucks is led by a lead truck on long-haul routes. 

“We’re obviously many years away from seeing autonomous trucks on Australian highways, but they could definitely be a future solution,” he says. “They could not only address the driver shortage, but would also reduce fatigue-based exposures and maybe even negate fatigue restrictions currently in place for drivers.”

Although full autonomy is a long way off , Craig has no doubts that it would also drive profi tability within the transport sector, as increased automation reduces the margin for human error.

“Reduced wage costs and increased productivity could both emerge as driver fatigue restrictions are negated,” he says.

This means brokers need to stay up to date on the latest developments in tech, AI and autonomous vehicles – but whatever form the industry’s future takes, Craig is convinced that brokers will have an essential role to play.

“We always want to make sure that brokers are kept up to date on new products and legislative changes,” he says. “Our distribution, risk engineering and underwriting teams are key in promoting new product awareness – but brokers are one of the most effective ways we have to reach customers and help encourage best practice in the industry."