Premiums in heavy motor could potentially soar if the current rate of accidents continues to increase.
The average claims cost has increased by more than 23% in the past three years, according to Lumley, part of Wesfarmers. If this trend continues, Lumley warns insurers could be forced to take drastic action.
“Contrary to popular belief, insurers don’t want to raise premiums. However, if the current rate of accidents continues, there will be no option but to increase insurance premiums/deductibles, or simply stop writing these risks and redeploy capital to other product lines,’ Lumley CEO John Nagle said.
Over the past 12 months, Lumley Insurance has analysed more 1600 claims, which revealed a significant increase in incidents involving drivers with up to 10 years of experience between 35 and 55 years old.
The results also confirmed that more than 65% of large claims managed over the past three years are the result of driver error such as distraction or a driver’s lapse in concentration.
Nagle said it was imperative that underwriters, brokers and their clients work together within the transportation industry to ensure that appropriate risk management strategies are implemented to reduce the number of accidents and make roads safer.
Lumley has created practical risk management tools that will help improve driver behaviour, culture and attitude. It works with brokers and their clients to: conduct regular driver toolbox sessions; set up driver mentoring programs; introduce driver training days; complete frequent assessments of driver’s capabilities; provide updates via email or newsletters on road safety; and create driver discussion groups to share experiences.
“While understanding the pressures around operating margins in the transportation industry, the management of companies that operate heavy motor vehicles will see a greater return on their investments,” Nagle added.