On 19 May 2021, the IIG held a webinar sponsored by Discovery. The IIG Deputy President, Thabo Twala welcomed all in attendances and introduced the topic of the day is tailored solutions for heavy commercial vehicles. Some interesting facts on the topic being, road freight is key to the South African economy as it supports infrastructure development and the transportation of goods across the country. The logistics sector is estimated to contribute around R480 billion to the national economy and road freight is the biggest industry within this sector.
The heavy commercial vehicles industry, however, faces unique challenges such as truck overloading, distracted driving and driver fatigue due to long hours on the road. It also faces increasing costs, which can largely be controlled by operating and maintaining vehicles well.
The webinar, therefore, focused on touching on these issues as well as highlight how the insurance industry can assist HCV clients to choose the best cover for their businesses to address these challenges.
Our two speakers for this topic were Clyde Troup, Head of Underwriting for Discovery Business Insurance and Justin Brice, HCV specialist at Discovery Business Insure.
Clyde is responsible for Technical and Market Underwriting functions, which includes risk engineering and the newly launched product for heavy commercial vehicles.
Justin has been in the insurance industry for over 20 years with exposure in various lines of business targeting internal and external key stakeholders. Justin also has sales and underwriting
experience across personal, commercial, corporate and specialised motor lines of insurance.
Clyde kick-started the presentation by clarifying what is classified by the term “Heavy Commercial Vehicle”. These are vehicles exceeding 3500kg and include trucks, pantechnicons, mechanical horses and heavy commercial vehicles with special attachments such as hoists and cranes. The heavy commercial vehicles’ industry plays an important role in the country’s economy, it was mentioned that this industry contributes significantly to the Gross Domestic Product of the country with an estimate of 11.8% of the GPD. According to the World Bank estimates, road freight is by far the biggest industry within the logistics sector followed by rail, storage and freight.
Although the HCV industry plays an important part in the economy, it also faces some challenges. These challenges include costs such as:
- Embedded costs such as Fuel process, carbon tax, toll roads, insurance, etc
- Delays at ports and border posts
- Vehicle tracking and tracing systems
- Warehousing and distribution operating costs
- Risk management costs
- Costs of compliance with legislation and standards
- Labour costs
These costs, unfortunately, represent 55% of a vehicle’s operating costs. These are some factors that insurers need to consider when writing HCV products.
Clyde also highlighted the challenges that HCV insurance providers face when insuring these vehicles. These include truck overloading which impacts steering, braking and acceleration, making it difficult to control the vehicle; Distracted driving including cellphone usage and lastly Driver fatigue.
Justin jumped in by sharing some insights on how brokers and insurers can add value to the HCV industry through RTMS engagement and compliance. RTMS (Road Transport Management System) provides standards to help HCV owners manage their fleet and keep their drivers safe. These standard are categorised as (1)Safety/Compliance (2) Driver Training (3) Driver Wellness and (3) Loading controls.
In closing, the speakers shared how technology can be used to improve fleet management. Findings have shown that technology drives performance of fleets, measures driving behaviour, provide dashcam solution and give an indication of load positioning on a vehicle. Advancement in technology provides the opportunity to combine telematics capability and dashcam solutions with inward and outward views of a cabin by providing video footage of each trip and at times of an accident. This technology also provides access to the fleet portal to view the history of trips taken and the location of harsh events.
Understanding the challenges that the HCV market faces allow insurers and brokers to tailor-make insurance solutions for HCVs and ultimately help clients choose the best solutions for their fleets.
The session ended with speakers answering some questions raised by attendees.
Article by Tebogo Raphathelo
This IIG Insight session was sponsored by:
