Santam Heavy Haulage is concerned that a chain reaction of events beyond the transport sector’s control has put the industry under serious financial stress, with some stalwarts having recently closed their operations. “More are likely to follow in coming months resulting from a mountain of increases and other threats,” says Anton Cornelissen, Head of Santam’s Specialist Division, Heavy Haulage.
The first, and likely the most impactful of increases, came in February this year when the South African Special Risk Insurance Association (Sasria), which provides cover against civil commotion, public disorder, strikes, riots and terrorism, introduced a ‘hefty’ premium increase. This was unavoidable, largely as a result of the civil unrest, torching and looting of trucks and businesses in KZN and parts of Gauteng in 2021.
“To give you some idea of just how sizeable the annual Sasria premium hike is, a heavy commercial vehicle (vehicles with a GWM above 3500kg) valued at R2-million, says Moonstone, is now insured by Sasria for R6901.14- compared to the previous R375.80,” confirms Cornelissen. It gets worse because in addition to Sasria’s increase, other factors impacting on bottomline for hauliers include: Covid-19, which left them struggling with slim margins; load shedding; a more than 100% increase in steel prices that in turn increases repair and maintenance costs; a shortage of new trucks entering the country; fuel price increases; the tragic rise in xenophobic attacks against foreign national employees; and the recent storm-related losses in KZN.
“This unfortunate onslaught of events has now forced reinsurers to up their premiums, which means underwriters of heavy haulage risks are unable to offer reprieve to their clients in terms of minimising their own premium increases. It doesn’t help that the Centre For Risk Analysis has predicted more lootings as consumers feel the mounting pressure of costs relentlessly being passed onto them,” states Cornelissen. “It also means that short-term insurers are now forced into the undesirable position of having to increase their premiums in order to sustain their risk pool.
”On top of this hauliers are challenged by increasing competition and worsening economic conditions, and let’s not forget the threat of labour disputes that are becoming more prevalent. There are no quick or easy solutions, however, there appears to be a growing trend by larger fleet operators that are either considering or moving their policies to international insurers. “This means valuable revenue is starting to leave South Africa,” says Cornelissen. “We just cannot afford to burden an already struggling economy.” Santam Heavy Haulage has stepped up as reasonably as possible, however, as Cornelissen emphasises, insurers in turn are now also impacted by the 30%-plus increase in respect of repair costs, increased number of claims, and a significant rise in the number of theft and truck hijack claims.
“As it is, the insurance industry overall is struggling to deal with increasing claim costs and while it has taken some two years to return to pre-Covid freight movement numbers, some industries like construction and aviation are still recovering from the effects of lockdown. That being said, as Santam we are fortunate to have diversified specialist businesses which allows us to continue to offer sustainable insurance solutions.
”While there is a margin of increase that cannot be avoided, Cornelissen and his team are engaging with clients, reinsurers, Sasria and authorities like the Road Traffic Management Corporation (RTMC) to minimise risks and ensure legislation is carefully considered.
“We are having the crucial conversations on behalf of our clients and the industry at large, to ensure the risks facing operators and their employees are mitigated. “We are doing what we can to ease the burden on transporters but it’s a struggle because there are so many challenges and much frustration within the sector. We steadfastly continue to focus on raising Santam levels of service and influence, and build our extensive partnerships and relationships,” says Cornelissen.
“Santam’s Heavy Haulage team does not simply take the approach of being purely an insurer, but a giant whose voice on behalf of its clients carries weight. We aim to affect positive change for the benefit of all in an attempt to ensure the sustainability of long-standing operators.
