Mtho Maphumulo, Senior Associate at Adams & Adams gives a view on the impact of the recent truck arson attacks on insurers.
OVER 20 trucks have been torched in various provinces including Mpumalanga, Limpopo, and Kwa-Zulu Natal, and, to date, only three arrests have been made.
The concerns of insurers, given the recent years’ major events, are well documented. It has only been since 2022 that there have been positive developments and signs of recovery for the industry.
The following considers the type of insurance claims that may arise from truck arson attacks and the possible measures which the insurers may consider implementing to limit their liability.
Possible claims
One incident of truck arson may result in losses amounting to millions of rands, with a number of claims flowing from a single incident. The most obvious is a claim for damage to the truck in terms of the fire section of the policy. There are also likely to be business interruption claims in terms of the business fleet policy, as the damaged truck cannot continue operations. There may be claims for loss of income and damage to the goods in transit. In addition, there may be personal injury claims where a truck driver and/or assistant suffers bodily injuries in the incident. In most severe cases, there may be deaths which may result in life insurance policies being triggered.
Impact on the insurers
There is no immediate end in sight of these incidents. What the insurers have in their control, however, is the ability to limit their liability. Options could include, not insuring trucks at all; excluding liability for routes that are regarded as “high risk”; raising premiums on “high risk” routes; imposing stringent security conditions in the policy; imposing higher premiums generally (not only for “high risk” spots). The insurers are at liberty to impose conditions that will limit their liability to the bare minimum. Such limitations and exclusions became prevalent at the height of Covid-19 pandemic where insurers were specifically excluding Covid-19 in terms of their policy.
However, insurers cannot summarily make such drastic changes to the terms of the policy. Much depends on the policy wording although insurers will only be able to make such changes at the time of renewal of policy or, upon giving notice to an insured.
Whilst there are discussions and suggestions on the way forward in dealing with this issue, the insurers are at liberty to implement ways in which they can limit their liability. If and when the situation gets better, insurers will be able to revisit their stance and the insureds will be in a better position to reopen negotiations for more favourable terms.
