MONEY MATTERS
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Ata
premium
Insurance is essential and it can be expensive as well as complicated to obtain the right cover at the right price. In the event of a claim you need to be sure you have the best cover so there are no more nasty surprises in the small print when the insurers are called in.
/nsurance is one of the few costs of operation of goods vehicles that has remained static over the past two or three years, though of course there is now a Government tax of 4% on premiums. In some cases rates have even dropped. There are brokers and a small number of insurance companies that specialise in vehicle insurance and in goods-in-transit insurance, and the market is quite competitive.
But what has changed is their attitude to the operator. It is quite unlike domestic house or car insurance where a simple phone call or two will bring quotations that can immediately be acted upon. Brokers and insurance companies want considerable detail on an operator's vehicles, his base or bases, his regular work, his patterns of operation, his drivers; you name it, they want it. Only after a clear picture has emerged is a quotation likely to be proffered.
Specialist broker
The market is one where a specialist broker can be of great value. They know the limited number of insurers specialising in the business and also the Lloyds Underwriters who handle it. They can also point out what is not covered by the policies.
For example—and topical at present—riot and civil commotion are exclusions from most goods-in-transit policies. Even carrying rela tively ordinary produce such as melons can cause difficulties: melons have a short shelf life. At its simplest: what if a vehicle breaks down and the produce misses its planned arrival at Covent Garden at 03:00hrs, a time when most buying is done and prices are at their peak?
Operators who haul fridge trailers usually have deterioration cover and others can obtain it at fairly modest cost.
Tony Gardiner, a director of Roberts & Davis, says there are lots of insurances which small operators may not know about. For example, strike and blockade insurance is relatively cost-effective and an owner-driver running to the Continent could obtain it for about £70 plus tax a year. It would pay £250 for every day a vehicle was delayed. But cover does not start until 20 days after policy has been taken out!
Something else that small operators should consider is replacement vehicle insurance. For a small fleet, hiring in a replacement for a vehicle involved in an accident, fire or theft can be a crippling cost, whereas in a fleet of, say, 30 the absence of one vehicle would be a relatively minor problem.
One way for operators to reduce insurance costs is for them to carry the cost of minor incidents themselves. An excess of £250 is imposed by most insurers anyway, but it is quite common for operatorsparticularly those with large vehicles—to carry the first £500, usually in return for a 10% premium reduction. Occasionally a slightly greater reduction might be offered, but anyway the discount given would never be more than the excess.
Gardiner recommends that all operators should consider a £500 excess. It will eliminate many minor claims going through the insurer and avoid what at the end of the day is only going to be a "pound-swapping exercise."
Emphasising this point another broker . points out that "insurers can be expensive banks." But Gardiner reckons that excesses are not just a benefit for the insurer: "they are a good tool to be used by the operator." Keeping track of those minor incidents should help him nip potential large problems in the bud.
Studying claims at the end of the insurance year (in other words, as the policy comes up for renewal) can be valuable—and is some. thing the insurer will probably do anyway before considering renewal. Half the claims might have involved damage from reversing into loading banks, and that would be something now identified that could be rectified by specific driver training. Defensive driving courses are becoming increasingly popular, though operators are not always keen on their drivers having to spend a day or two away from "real" work doing them. But where a fleet has a bad track record an insurer may insist on this before agreeing to renew the policy, and may well be prepared to contribute something toward the cost.
The biggest changes in insurances have been in goods-in-transit. Within recent years pure transport operations have devolved into logistics, with contractors taking much wider responsibilities. Some multi-nationals out
source manufacturing to, say, Asia, but with components obtained worldwide, and then supply completed products to America or Western Europe from just one or a few warehouses. Transport companies provide the service and often deliver direct to retailers.
Many UK companies have expanded operations into the Continent, and with them have come their transport suppliers. Eastern Europe is an increasingly hazardous destination. And almost anything going outside the EC will probably involve T-forms, carnets, back-to-back agreements with sub-contractors, contract conditions with customers and much else. With all this there is a definite trend for major manufacturers to try to pass on liability to the transport or logistics suppliers. Smaller sub-contractors in turn are asked to accept much wider contract conditions. Goods-in-transit insurance has therefore become quite complicated, though it is still a competitive market.
Frank Heinrich,
marine development executive, international transportation, and risk management consultant with Aeon Group, explains that the focus is on loss control. His company can provide proactive advice for operators so that they can present to the insurers well protected, well thought-out and properly controlled schemes of operation. Aeon will point out the financial and quality benefits from risk management and put forward recommendations that are practical but not too expensive so operators can see a reasonable return on their investment.
Finding cover
Much is now down to management information and Aeon is developing software that can record, monitor and analyse. It provides schemes for individual haulage organisations and is used to finding cover for the former Yugoslavia, one-time Soviet Union countries, Greece, Italy and other "difficult" destinations.
The key to getting comprehensive cover at reasonable prices, says Gardiner, is for the operator to talk to a broker expert in haulage. This must be a long discussion, with contracts and procedures being explained. What experience has the haulier and his staff? What sort of locks do his trailers have and are they left attached or detached from drawing units? Are immobilisers or tracking devices fitted?
Each case will be judged on its merit, but the more information the operator can provide, the better the judgment the insurer can ultimately make on suitable terms, including premiums, any excesses and maybe even driver training.
Crime is on the increase. But the company with a well-run operation, a system of risk management and a good claims record should benefit from lower premiums.
Li by John Aldridge
CONTACTS • Roberts & Davis: 01638 608060
• Aeon Group: 0171 6r .:Innn. • CM's rlassitie-daaae. list specialist haulage insurers and brokers every week.