Ensure you don’t get burnt
Ensure you don’t get burnt
The importance of insurance can’t be overstated. It protects not only a company’s assets, but its sustainability as a whole. Here we delve into ways you could reduce your premiums and mitigate risks.
The non-governmental organisation information portal ArriveAlive.co.za aptly states that technology is changing everything around us. “It affects how we live our lives, communicate, drive and even manage our financial affairs. It is only fair to expect that technology will have a significant impact on both road safety and how much we pay to travel our roads.”
It notes how, crucially, vehicle telematics can speed up real information about driving behaviour, which, in turn, opens up a world of opportunity for insurance companies across the globe.
“There is a clear and direct relationship between vehicle telematics and the benefits they are able to provide to the insurance industry in measuring and reporting on driving behaviour,” says ArriveAlive. “Insurance is all about measuring and calculating risk. Insurance companies evaluate the level of risk and then set premium rates and coverage per the measurement in question. Vehicle telematics is the best, most effective and scientific way to limit risk.”
Telematics allow insurers to better measure risk by knowing what kind of driver is driving the vehicle. It allows them to monitor whether a driver is adhering to the speed limit or is prone to excessive braking; where the driver is driving (if they’re travelling on main roads or if they’re frequently entering hazardous areas) and how far a driver travels before taking a break.
“Despite the significant growth in the insurance telematics industry, one of the major challenges is the concern about privacy,” ArriveAlive points out. “Some drivers and vehicle owners believe that the technology to monitor driving behaviour from beneath their dashboard oversteps their right to privacy.
“Industry experts have recommended that insurers be as transparent as possible to address these fears. By making a full disclosure of value-added services to customers, and carefully positioning the offerings with the right messages, they will succeed in winning over consumers.”
ArriveAlive adds that the concerns and challenges are, however, insignificant when compared with the benefits and overall positive impact of insurance telematics.
“By providing the incentive of cheaper insurance premiums for responsible driving behaviour, the insurance industry is also promoting road safety,’ it notes.
Companies can also implement various strategies to mitigate risk and gain even more benefits. These insights are gained from MiWay’s experience in working with clients across the transport industry and highlighted by Jason Mellow, head of MiWay Business Insurance:
• Track your incidents as well as your claims. Incidents are the number-one predictor of claims, so if you note all incidents – not just the claims – you’ll find where there are problem areas and put preventative measures in place. The goal is to reduce future claims and the chances of premiums being increased.
• Find the trend. It is important to keep records of incidents, as you could find that many of your claim costs come from the same area, department or cause. If you can find the root cause of the claims, you can be proactive.
• Mitigate your risk. South African roads bring with them a whole set of risks, some of which are universal and some unique to our situation, and by their nature cannot be controlled. However, if you know where the highest risks are, discover those that occur most frequently or cost the most, you can establish a risk management strategy that takes you a step closer to protecting your staff and cargo, as well as reducing your insurance premium.
According to MiWay records, the top three causes for claims are mechanical malfunctioning, followed by collisions and damaged glass (windshields and windows).
Mellow also provides various ways that companies can cut down on claims and unnecessary time-consuming admin.
1. Schedule regular checks and services to ensure your vehicles are well-maintained. All vehicles should be maintained to a minimum standard, with essential safety equipment like brakes, indicators, steering components and tyres, regularly checked and kept in good operating condition.
2. Avoid overloading. Overloading will damage a vehicle, particularly in the long run; it is linked to roadworthiness.
3. Verify your drivers’ information, for example, the validity of drivers’ licences and professional drivers’ permits.
4. Provide proper training and possible advanced driving courses. People make mistakes; the Automobile Association notes that the single biggest cause of road accidents is human error. This underscores the necessity for appropriate training for every driver.
5. Understand your insurance cover and optional cover available, as well as the excess payable.
6. And make sure you have adequate cover for goods in transit. Truck hijacking remains a problem (the 2019-20 crime statistics show it has increased by a further 1,7%) as does pilfering. “Taking precautions against both hijacking and theft is advised, but adequate cover for goods as well as the vehicle is essential,” says Mellow.