Key insurance outtakes from Q1
Unfortunately, Q1 has been characterised by insurance premium rate increases across the board for trucks, trailers, and plant and machinery. These overall ‘hard market’ conditions are the result of high claims costs (both in terms of volume and severity of claims), as well as the high vehicle and machinery replacement costs.
In response to these factors, insurers are being more selective in the risks they are willing to underwrite. For example, some of the larger transport insurers will not currently write insurance for a small operator with multiple claims, as they currently view this as unprofitable. There also continues to be reduced insurer appetite and capacity for distressed (high claims) accounts.
Large fleet accounts that do not have many claims are the exception and insurers are still pricing these risks competitively. Large leading fleet accounts tend to have strong company risk management policies and procedures, a culture of safety, and a focus on driver wellbeing.
Prices for the second-hand vehicle market remain competitive. In this environment however, underinsurance is a significant issue, and there is a risk of clients not being adequately covered in the event of an incident. We urge clients to ensure they are insured for a sufficient amount to protect their businesses.
Industry insights for Q2
A shrinking pool of available drivers is an ongoing issue, causing some small operators to reduce the size of their fleets and operations. An influx of less experienced drivers is adversely impacting insurers through an increased frequency of claims whereas experienced, well-trained drivers tend to have fewer claims than less experienced drivers.
A shortage in available parts continues to slow down vehicle repairs. Clients may consider the option of downtime cover when taking out commercial motor insurance or renewing their current policy, as this may provide relief in the event of lengthy repair processes and claims delays.
Developments to watch
Data from The Australian Bureau of Statistics released in late September showed that automotive fuels had increased almost 14 percent in the 12 months to August. From an operator profitability perspective, the increase in fuel prices is placing significant strain on the transport industry, particularly smaller operators who often struggle to pass on costs to the companies for whom they are hauling goods.
From an electric truck uptake perspective, there is still a lot of work to be done to enhance infrastructure at both the Government and industry levels.
A wave of new technology targeting safety continues to sweep through the industry and the advent of telematics technology (including engine diagnostics, vehicle location, and driver behaviour) is spreading quickly. Standard features on trucks are continuing to expand and many of these features provided in small trucks are similar to top-of-the-range passenger cars. In time, these features are likely to support in the reduction of claims incidence and may help to reduce pressures on premium increases.