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??

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:

MEMBERS’ CIRCULAR 221 OF 2009
Motor Insurance- Prime Movers and TrailersWe refer to Members’ Circular No. 112 of 2009 dated 22nd May 2009 on the above matter.We have been informed that the wordings “The NCD would apply to a policy where the prime mover is the main vehicle and any one trailer can be attached to it at any one time” are not sufficiently clear. 

To clarify the earlier circular, please note that the NCD does not apply to any trailer be it stand alone or whilst attached to a prime mover.

Members are requested to take note accordingly.

 

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?

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!

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8 comments for “Who stole my No Claim Discounts meant for my Trailer?

  1. admin logistics
    October 5, 2011 at 14:55

    Actually, i really want to know why in the renewal notice for some insurance company still show the NCD deduction eventhough the NCD is not allowed for trailers? It is so troublesome for those who are not really understand the whole situation specially for the accounts department. If not allowed then, why the deduction still show in the renewal notice? Please assist.

    • October 9, 2011 at 11:34

      Yes, I agreed that the NCD column for trailer policy should be taken down least it confuses people.

  2. Anonymous
    February 12, 2010 at 01:55

    Guess… today the industry has no real issues because not many insurers write commercial “A” permit aggressively. Most goes to MMIP outlets to buy their “A” permit insurance reqt and this includes their trailers as well.

    • February 13, 2010 at 03:12

      Yes the transporter and forwarders did have a meeting with PIAM last year over the loss of NCD iro trailers but looks like PIAM stood firm with their decision. So, there is really nothing much the their association could do except to go push the government further.

  3. December 23, 2009 at 01:36

    It seems some insurers are still allowing NCD to trailer. I supposed this are given by agents as some of them still not aware of this development! The agency system that they used to issue the electronic motor cover note also have no control in place, so the agent just issue and give the NCD for trailer (they said still automated by the e cover note system). Then, another issue, most agent e cover note have not been upgraded to deal with this new development, insurers said, upgrading the system costs money and time, so most not upgraded yet. So how to monitor ah??

    • December 24, 2009 at 17:10

      I think it is not easy to do changes to both the front-end system and the back-end system at the same time. There are just too many system change requirements nowadays, and ISM system integration is just one of those.
      As for the controls, it is for PIAM to change the way that audit is to be conduct – nowadays, there is no real requirement to check paper documents, but rather check the system fuzzy logics and how the various modules function.

  4. Commercial Buyer
    November 29, 2009 at 02:56

    Ever since the insurance industry is not keen to take up A permit, there is no longer any effect on us – the Motor pool is already charging us way too high with the loading! By the way, the pool is still allowing NCD for trailer, so it is also okay as of now!

    • November 30, 2009 at 09:05

      I supposed the retraction of NCD on trailer as not been filtered down to MMIP yet or they have requested time to sort out their backend processing system. It is just a matter of time….

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