Market for PPVs smaller, less competitive

Cedric Stephens, Contributor

Question: Last year I bought a Toyota Hiace Minibus with a bank loan. It was licensed as a public passenger vehicle (PPV). A few months after the purchase, it was involved in a single-vehicle accident. The insurance company wrote it off as a total loss. After the claim was settled and the loan repaid, I bought the wreck. The vehicle was repaired after a long struggle. My attempts to find an insurer that offers comprehensive insurance have been unsuccessful. Can you help?

- D.R., St Ann's Bay PO, St Ann.

HELPLINE: The problem that you - and other persons who operate PPVs - are facing is the result of many things.

Some of them include, in no particular order, corruption on the part of persons employed by the transport regulators and by operators in the sector, government policies, poor driving habits, a culture among transport owners/operators that places more emphasis on making dollars rather than on safety, and an 11-year history of operating losses by most motor insurers.

These things have led to a situation where only three or four of the 12 insurers that are licensed to conduct motor insurance actually do so.

Put simply, in the same way that transport operators compete for passengers, they now are also in a contest for motor vehicle insurance. There is an imbalance between demand and supply. An increase in the number of insurers who specialise in this type of coverage is most unlikely at this time. The few insurers that are still offering coverage are now calling the shots.

In the long, distant past, insurers created a pool that catered for the special needs of persons like you. Each member of the pool shared in the premiums, losses, and expenses according to a pre-agreed formula.

One of the benefits of that arrangement was that there was an implicit guarantee that coverage would be available. It is not clear what led to the disappearance of the pool, or why it has never been replaced. Now, each insurer is expected to do its own thing.

As you have seen, there is no guarantee that coverage which is mandated by law is available, or that persons like you who want to transfer their collision damage risks can do so.

Owners or operators like you who were involved in accidents, non-owner-driven vehicles, owners/drivers who do not report accidents or who are suspected to be involved in 'bandooloo' activities, persons under 25 years old with less than three years' claims-free driving history will find it very difficult to get coverage.

If coverage is offered, it will come with a big price tag. When I tried to get a quotation for my hypothetical PPV by telephone, for example, the person at the other end wanted me to disclose my taxpayer registration number (TRN) before offering terms.

Companies that still insure PPVs have taken steps to avoid granting coverage to owners/drivers who are seen as unlikely to reduce the insurer's operating losses.

Mature, honest, law-abiding and God-fearing transport operators who understand "the runnings" can take action to get and maintain coverage.

Step one is to develop a relationship with their insurer. See them as a partner — not the enemy. You share common interests. Insurers assume some of your business risks in exchange for the premium while you carry some.

Step two is to pay particular attention to the persons who will be driving the vehicle. Hired hands, unlike owners, invariably do not have a financial stake in the vehicles that they drive. Driving carefully and avoiding collisions is often not on their agendas. Bear these things in mind when you make hiring decisions.

Also remember that there are persons who have bought their licences or who are unable to read and write. If you do not have any experience in hiring employees, ask a friend who has the skills to help. Be very careful how you compensate the driver.

Do not reward the driver based solely upon the amount of money that is collected from passengers. That practice is, I believe, partly responsible for a lot of the bad driving that we see from PPV drivers every day.

Top-of-the-line is a phrase that is often used to mean of a high quality. Owners/operators of PPVs should by words and deeds try to persuade motor insurers they are top-of-the-line in all aspects of their operations — not run-of-the-mill.

This extends from the appearance and condition of the vehicles, compliance with regulations, selection and training of drivers, claims history, vehicle maintenance, etc.

When the problem is approached in this manner, it may turn out to be much easier for those in the know to obtain coverage for their PPVs.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233