A torrent of civil unrest incidents in 2021 has again highlighted the need for fleet managers and retailers to proactively take steps in mitigating the risks associated with civil unrest.
In July 2021, ten days of violent rioting and looting spread across South Africa, resulting in 534 separate incidents reported, which included the gutting and burning of trucks. Losses to retailers amounted to an estimated R2 billion.
The rioting occurred at the height of the Covid-19 pandemic when food insecurity and the financial impact of lockdowns were felt by communities across the world. Once protest action boiled over into violence, the entire supply chain had to reevaluate their approach to these types of risks.
“The freight and logistics industry forms an integral part of the South African economy,” says Charles Morgan, Operations Executive of leading vehicle tracking and telematics provider, Netstar, a subsidiary of Altron. “Without transport and logistics, the basic economic principle of supply and demand can’t be met,” he says. “Without a functioning logistics industry economic growth will be stifled.”
Insuring civil unrest
The unrest in July 2021 impacted the pricing of fleet insurance policies, which saw an increase in premiums due to the number of claims during that period. On top of this, fleet managers were hit by an increase in the cost of their South African Special Risks Insurance Association (SASRIA) cover, which insures against unique risks such as civil commotion, public disorder, strikes, riots, and terrorism.
In addition to riots, civil unrest in South Africa is marked by delivery protests and blockades, which often delay the delivery times of sensitive loads such as perishables, leading to damages even when trucks go unharmed. Both risks are covered separately by SASRIA. It’s important to note that SASRIA insurance policies offer insurance above and beyond fleet insurance by other insurers, who generally exclude civil unrest from their policies.
“Covid-19 shook us to our core and made us question how prepared we really are for a crisis,” says Gideon Galloway, CEO of King Price Insurance. “As millions of South Africans re-evaluated their finances, their risks and their lives, we’ve seen a growing realisation that insurance, so long seen as a grudge purchase, is critical to cushioning life’s unexpected blows.”
“The July riots were an eye-opener,” says Angela Hughes, Commercial Underwriting Manager for Standard Insurance Limited. Hughes, noting a certain vulnerability that was exposed in the country, where the target of civilian anger was constantly shifting, and no-one knew where it would move next.
The increase of SASRIA premiums also came as a surprise to fleet managers. “It’s quite a jump from before,” says Hughes. “July was the first time SASRIA has been hit so hard – it was their first mass claim.”
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Two main factors that contribute to a fleet’s risk exposure include the route of the cargo and the nature of the cargo load. Due to the sporadic and unpredictable nature of civil unrest incidents in South Africa, it’s difficult to pinpoint or isolate certain kinds of fleets, or fleets carrying specific goods as being prone targets, explains Morgan, but statistics indicate that some routes and loads are more susceptible than others.
Using data to plan ahead
“Data is king, and insurers can collect a lot of it,” says Hughes. By feeding data to risk managers and companies like Netstar, telematics can play the role of an oracle in these situations, providing real-time information of a possible risk scenario on the ground. Fleets can go beyond their usual approach and become forward-thinking on how they avoid potentially dangerous situations.
Imagine the scene: Rioters set up a barricade in the road at a certain location, but a truck driver is notified ahead of time via SMS or notification on an app and can safely divert from the route. Or, by using historical data to highlight particularly dangerous routes, drivers can avoid dangerous routes altogether. By using these data sets fleet managers can become proactive in minimising risk to drivers and their cargo.
“In most incidents of civil unrest, fleets are not targeted specifically,” says Morgan. “Some fleets can be regarded as unlucky when being caught in the middle of such incidents. These risks can, however, be mitigated by obtaining early information about such events and then utilising vehicle tracking to re-route vehicles away from these incidents.”
There are five key takeaways for fleet managers.
Ensure that you have adequate SASRIA cover.
- ROUTE PLANNING
Use telematics data to preemptively plan routes and mitigate risk proactively.
- TELEMATICS MATTER
With telematics, you can ensure your driver is safe, and potentially avoid dangerous incidents.
- YOUR DRIVER’S SAFETY IS MOST IMPORTANT
Provided with a panic button, the driver can be rescued even if the load is lost. Always keep open communication with drivers.
- GROW YOUR NETWORK
Become part of a wider risk management network to gain access to information of incidents of civil unrest.
Civil unrest doesn’t happen all that often, but as was evidenced last year, when it does occur, the losses are severe. It served as a siren to insurers and their clients of the need for measures to mitigate these risks before they happen.