Most people have mixed feelings about insurance … it isn’t referred to as “a necessary evil” for no reason. One Financial Services Holdings (ONE), through its Truck Test 2015 participation, is proving this statement wrong.
Do you have insurance? The one question that always pops up as soon as things go pear-shaped …
This is often followed with critique on organisations that provide it and their service delivery. Insurance, however, is a necessary evil that can’t be ignored – especially in an industry fraught with risks, from hijackings to road accidents.
Sid Beeton, divisional manager for transport-based insurance at ONE Insurance, explains that this is exactly why ONE joined Truck Test 2015. “With any commercial vehicle enterprise there are certain risk exposures.” He adds that ONE receives good support from Phoenix Risk Solutions, which is one of the insurance brokers for AfriSam – and both were involved with Truck Test 2015.
“Phoenix approached us when they decided to become involved with Truck Test 2015, as the event kicked off from AfriSam’s offices and the company provided the loads,” Beeton tells FOCUS – adding that Phoenix asked if ONE would insure the loads, free of charge, for the test.
“It was unlikely that the participants would be hijacked; it was quite a convoy – so theft and hijacking weren’t a risk,” Beeton points out. “The vehicles could have overturned, however, or it could have rained during the testing days and the cement could have got wet … there were risk exposures and we agreed to cover that risk, free of excess and free of premium.”
It is about more than just keeping the loads safe, however … the transport industry is vital to ONE. “Our company generates over R1 billion in premium income per annum and, of that, 40 percent comes from the transport industry,” says Beeton. “Most of our clients own commercial vehicles; it really is our bread and butter. We insure the trucks, the load, the trailers and liability to other road users.”
It’s no wonder that ONE’s risks are so narrowly aligned to those of the transport industry. “As we align to the transport industry, we face the same challenges that it faces. These include: crime and the manner in which you manage it; the increase in the number of inexperienced and unlicensed drivers; unlicensed vehicles; and an ever-increasing number of uninsured motorists on our roads. “
He continues: “When I started in transport insurance in 1984 there were probably five players at most.”
All of these challenges necessitate that insurance providers have to provide value-add products, which have to be funded from what they can collect from clients. “In order to remain competitive and to provide protection against the risks associated with commercial vehicles, insurance providers are looking for ways to add value for their customers, but we have to show some profit, out of the premium base, for our shareholders.”
This couldn’t be that hard if you get R400 million a year, right? Well, not quite. “We are placing more focus on procurement … our goal is to run below 65 percent. Many companies are running over that,” Beeton emphasises.
He continues: “Our transport based insurance business is worth R400 million, of which we pay out as claims some R250 million a year. In that amount there is a lot of wastage. We are addressing the procurement issues as one of the main segments where we can reduce our claims outlay and, therefore, offer more value and competitive pricing.”
Beeton provides an example: “The same windscreen replaced by an unvetted supplier could cost a client R10 000 while through procurement initiatives, we can replace it (without compromising on quality) at R2 500 and provide an excess-free transaction.”
Another challenge is the extended warranties that original equipment manufacturers (OEMs) are offering. “We understand that the drivetrain and mechanical parts can’t be compromised and that the warranty has to be protected and honoured when these components are involved, but second-hand or alternative parts do have their merits,” Beeton explains.
A perfect example is replacement cabs. “It might be economically viable to use a reconditioned cab, for example, when a vehicle – with a five-year warranty – is involved in a major accident in its fourth year,” Beeton points out. “It doesn’t compromise the performance of the truck and it can save a lot of money. A brand new cab, on the other hand, could make it uneconomical to repair the vehicle, which is then written off instead of being repaired and kept on the road.
“We are meeting with the OEMs to ensure that they aren’t unreasonable with the enforcement of their warranties,” he reassures.
Despite all the challenges, ONE is managing to offer more than just vehicle insurance as it is moving towards, what it calls, the transport solution. “We offer value-add products, such as tracking devices, through our joint venture with Autotrak – which trades as ONETrak,” Beeton tells FOCUS. “Hijacking is a very real risk in the industry, both for loads and for trucks.”
He adds that ONE has a joint venture with an incident risk management company Truck Assist. “They can be contacted anytime for any roadside event or emergency, not only for accidents; for example, if a client runs out of petrol, or has a blowout or if his tyres are stolen and he is stuck on the side of the road. Truck Assist will put them in touch with a service provider who will get them moving again.”
ONE Insurance is broadening its horizons. “We are in the process of rebranding from ABSA to Mutual & Federal, which is going to open up exciting opportunities for us,” Beeton points out. Mutual & Federal will become ONE’s new risk carrier, so to speak.
“We were previously writing business through an ABSA licence and, although ABSA has been a fantastic partner, the new structure with Mutual & Federal will bring additional brokers into the market,” Beeton explains. “There was some reluctance of other bank-focused insurance brokers to deal with a company that operates under the ABSA Group.
“The Old Mutual Group is expanding into Africa at quite a rapid rate and we plan to be part of that expansion, and to have new horizons across border into Africa,” Beeton adds. “We’re seeing new ventures happening and we are very excited about expansion opportunities into Africa.”
It’s clear that insurance can be much more than “a necessary evil”. It can be a value-adding partner that works with you to overcome common challenges …
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