Who stole my No Claim Discounts meant for my Trailer?

Whenever I met up with agents nowadays, they never failed to complain over decisions that were adopted by the industry recently. Of course, mandatory direct rebate and refusal to write third party cover were some of those but very recently, the agents, especially those writing substantial portfolio of commercial “A” vehicles are again upset over their clients having lost out on NCD in respect of trailers. They claimed those discounts were already part of the industry day-to-day practices and no reason why NCD should be removed entirely. They just find it extremely hard to explain to their customers.

If someone is crushed in between the prime-mover and the trailer, blame who??

At least I saw one agent scolded a marketing personnel out of frustration, and this was not without reason – when NCD attaching to standalone trailer is already a norm. Those customers actually earned those NCDs for their trailers - from ground up over a number of claim-free years! These are now taken away (a finger-snap of a decision) - right when those customers (logistic industry) are still reeling over the effects of the recent global financial crisis.

That marketing personnel actually screwed the agent back – “Hey! What can I possibly do? You might as well call the Lorry owners and the Haulage & Transporter associations and not forgeting also, PERWAKIM to do some more protest demonstration!” Wow! What a way to reply to that poor agent!

The following is the excerpt of the member circular issued on 28 September 2009:

I guess the decision was made simply because (detachable) trailer is not in actual fact a vehicle, the latter is a motorised unit with engine but the former is not and would need to be towed by a vehicle. The only thing is, this fact was never properly defined in the policy document, neither was this specified clearly in the tariff. Moreover the tariff clearly states trailers cannot be insured separately…. and should be insured as part of the prime-mover, eg. one policy should be issued covering the prime-mover vehicle and those trailers that it would be towing.

In the another previous write up, I did mention about some legal issues concerning a third party liability claim involving insurer A covering the prime-mover and insurer B insuring the trailer. This can be quite messy if both insurers are denying the claim. However in today’s competitive environment it is no longer practical for contention that all relevant trailers and prime-mover must be insured under a single policy, ie. by one insurer. This is because trailers may be towed by a prime-mover other than those belonging to the owner of that trailer. Moreover, trailer is deemed to be a “Motor-vehicle” within the definition in the Road Transport Act, thus has its own registration and road tax. Perhaps the industry is still stuck with its head buried in the tariff resulting in the lack of initiative and motivation for constructive changes…..

You never like the menacing bum, do you?

So, did PIAM achieve anything by cutting out those trailer’s NCD? Certainly it did, at least putting in perspective that the Motor tariff had never prescribed NCD for trailer thus removing whatever past recurring issues surrounding the insurance of trailers – just as simple as that ! Of course this decision did save the industry a hefty amount of premium from being discounted …. perhaps in region of RM80 million.

However, this decision too exposes the industry members to legal suit for compensation at least from the following two aspects:

1. Prior to September 2009, individual policy had been issued to standalone trailer with NCD allowed, and the insurer(s) accepted the fact that trailer is a “vehicle” by virtue of the policy wordings since insurer did not redefine the term “vehicle”, and
2. The definition of “vehicle” in the policy wordings did sounded like trailers are vehicles. The policy wordings specifically depicted Your Vehicle as referring to the vehicle, and its accessories, including those described in the policy schedule! Would having the trailer specified in the schedule be construed as agreeing that the trailer is a vehicle?

Sounds messy don’t they? Anyway, I supposed taking out the NCD is still the better way to have greater uniformity in handling this Commercial “A” risks….

Finally, PIAM still did not address those legal liability issues relating to third party  claims involving two different insurers – the prime-mover and the trailer. And with this “no NCD” decision, insurers are now given a new message – insuring trailers (for they are made more worthy to be in our underwriting books) but avoid those prime-movers, the loss-making culprits…..

Is TRAILER your cup of tea? The Lorry owners are not going to be happy!