Avoiding the road to nowhere


The old adage Africa is not for sissies most certainly applies to South Africa’s motor risks.

We read stories daily in the press about the general lawlessness on our roads, from drivers driving in the emergency lane and speeding, to those causing horrific accidents that lead to the tragic loss of life. We also read about incidents that cost the insurance industry billions of Rands.

Pinpointing the problems

The problem starts with the poor training of cadet drivers who, once they have passed (or bought) their driver’s licence, are let loose on our roads.

A statistic presented to meet me recently was that 32% of Zimbabwean driver’s licence are not authentic, and that 66% of their Defensive Driver Certificates (PrDP) are fraudulent.

This is however, the tip of the iceberg. There are many South African, Swazi, Mozambican, Lesotho, Malawian and other drivers who have fraudulent licences. And this exacerbates the problem.

In addition to this, we have the issue of drunk driving, underage driving, unlicensed and unroadworthy vehicles.

Taking action

Working closely with brokers and clients, underwriting managers try and mitigate the risks mentioned above by encouraging the verification of driver’s licenses, including credit and criminal checks.

We highly recommend, and sometimes prescribe, that drivers must do a Defensive Driver Training programme.

Unfortunately, many clients find these measures an inconvenience and a cost that they do not want to bear. As a result, we have seen an increase in claim rejections due to false licence in the past 24 months.

Clients are also encouraged to practise effective fleet management, including driver monitoring. If drivers are monitored for poor driving habits, driving hours and unscheduled stops, and are trained to comply; we find the cost savings in fuel, maintenance and tyres pay for the client’s insurance premium.

Telematic devices are useless if the operator does not use the data rendered to manage his fleet and drivers. It is becoming more prevalent for underwriters to have access to the data as a condition of their insurance policy. This helps them manage their risk by being able to sanction particular drivers and even exclude cover for poor performing drivers.

Telematic devices in the form of cameras are a useful tool to manage drivers if they have live feeds, but require constant monitoring to be effective. They can in certain circumstances help the insurer determine culpable in third party cases. These camera systems are not prevalent due to their cost, as well as the fact that they are susceptible to driver tempering.

A force hand

With the downturn in the economy clients are being forced to cut margins which in turn mean that they cut critical costs such as fleet maintenance. They push their drivers to work harder and longer which increases driver fatigue. This in turn increases the risk of an accident occurring. There has been huge pressure to reduce premiums in the face of higher claims incidence and higher claims costs caused by Rand depreciation and labour demands.

Apart from some operators taking chances on claims, fraud is being perpetrated by repairers who often include the client’s excess payment in the repair cost as well as paying towing operators, assessors and even brokers a percentage of the repair cost. This unscrupulous practise costs insurers hundreds of millions of rand.

Look to the future

One point of excitement for the future is the idea of driverless trucks. In principal, you could have a long train of trucks driving at a steady speed without stopping and without any incident – thus improving efficiencies, reducing costs and saving enormous amounts of money in labour, maintenance, tyres and fuel.

From an insurance perspective, one would expect the own damage factor to reduce substantially, but there would still be a place for theft cover, third party cover, goods in transit cover and so on.

Centriq Insurance Company Limited and Centriq Life Insurance Company Limited are authorised financial services providers