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Ensuring the crane sector has the right insurance coverage

Crane operators need comprehensive insurance to protect themselves and their business, so it's important you have the right cover.

Crane operators need comprehensive insurance to protect themselves and their business, so it’s important you have the right cover.

Cranes and Lifting Magazine sat down with Underwriting Agencies  of Australia’s (UAA) Chief Services Officer, George Grasso, Chief Executive Officer Michael Murphy and major client Shawn Borger from Borger Cranes to discuss the importance of implementing the right insurance policy.

Shawn Borger: For Borger Cranes, the most critical issue is getting a crane back into operation after an incident. So we rapid approvals from assessors and repairers who can jump on the crane to get it straight back to work. Time off the road is critical time, not just from a monetary perspective but also from the customers’ point of view. When the customer expects a crane we need to have one ready, so we need people who know how to get the crane fixed and back to work ASAP and that includes our insurers. I believe other insurance companies will take an extended period to get issues approved for a repair where as the turn around from UAA has always proved to be quick and efficient.

George Grasso: When an incident occurs, we receive the incident report and the claim and we are onto it straight away. We appoint our cranes experts who work with UAA and, in this instance, Borger Cranes, we examine the extent of the damage, understand what caused the incident, identify if there are any other liabilities from another third party, determine the severity of damage and determine the next steps in terms of is it a repair proposition. We try to find a way to get the crane up and running as quickly as possible and if we are looking at a total loss, settle with the client as quickly as we can. With plant and machinery, particularly cranes, every hour that machine is not working is costing money, so our ultimate goal is to get it up and running as quickly as possible. Our reputation is based on how quickly we can act and respond and help our clients.

Michael Murphy: The point that Shawn is making is really valid, it is not only the reputation of UAA at stake, it’s the reputation of Borger Cranes with his clients. He’s involved with multimillion-dollar extended term contracts and he can’t let his client down and if he does the future contracts won’t come around again, that’s the key issue.

Shawn: With the Sydney market as it is, we’re operating in a highly vibrant environment and there are a lot of supply and demand issues so we can’t be waiting ages for answers if there has been an incident. We have a good repairer that UAA and Borger Cranes has a good relationship with, this really makes a difference when it comes to having a crane fixed and back into the fleet. Key for me is to see any issues resolved quickly and the crane back to work ASAP.

Relationships are also important and I can ring George or Michael anytime and they can ring me to discuss different matters. The key to the success with UAA is the relationship with the various individuals including the broker.

We look at all providers, whether it our insurance, finance or tyre supplier as part of our business, we want to work together and ensure that they’ve got our backs.

UAA offers a policy covering an overall amount of cranes and if we add to the fleet and purchase six new cranes in a year these are added to the policy. We talk about the market to see where premiums are going and see what impact the things we have done in the business and what the market is doing with insurance. We are continually trying to improve our business, we are embracing the rapid changes that technology is bringing to the crane sector and we are continually up-skilling our employees. Obviously, we want to minimise our risks and so does our insurer as does our customer. We want to ensure a good and safe days work.

George: As Borger and other crane businesses implement more and more technology, increase safety policies and enhance the safety aspect of the work place, this does this impact on premiums in a positive way.

Shawn: At Borger Cranes we are certainly trying to implement the newest and latest technology in the cranes to make improvements for the driver so he is more aware of the site, or that our foreman is more aware of risk assessment and management. If you have 20-year-old technology, there are likely to be more accidents. We’re certainly keen to embrace new technology to make operations safer.

Michael: The bottom line is that the implementation of new technology can impact on the premium in a positive way. The major issue, and to Shawn’s point again, if he’s reducing the amount of claims that he has through accidents, then clearly the less claims he has the better his premium is going to be. It is also a duty of care. As Shawn said earlier, anything that allows his drivers and operators to be safer is a duty of care. In my opinion Borger Cranes is at the forefront of this in the crane industry.

Shawn: We want to be for many reasons. Our business is based on family values. We employ nearly 300 people. So, if you have a family of four there are 1200 people that rely on Borger Cranes, so we want to make sure that we eliminate as much risk as we can so we have a safe and successful business for all these people. The safety side of our business is very important and technology gives us an edge over the competition.

Take trailers for example. People can buy a semi trailer to carry the counter weight for $25,000. We buy top of the line product at a premium, which makes transporting counter weights easier, faster and safer. We have pinned counter weights instead of them being tied down and we have a huge variety of trailers which make our operations much more efficient. We’ve bought something like 50 trailers from TRT, which have contributed to making our business much more efficient in terms of economics and safety, they’ve made a major contribution. It’s amazing to see the savings we can make just from a semi trailer. A person working with chains can take 30 minutes to tie the counterweight down, where as with our trailers it’s all pinned and done within five to ten minutes. You save money on wages with faster crane set up faster times and it makes you look more professional. When one crane company takes 30 minutes to set up and another can take three times longer than that, you’ve got to remember that the customer is paying for that time, it’s all down to technology. This type of thinking is now coming into our industry but we’ve been implementing it since we’ve been in business and its been a big aspect of our game.

One of the most important issues is the relationship you have with a broker and that’s a big up side of working with UAA. From a day to day perspective I can talk to Andrew at the brokerage about renewals and additional cover for new cranes etc. but when it comes to major projects that we are involved in, we certainly feel comfortable with UAA. On the bigger jobs there’s less risk but the paperwork is more stringent, safety processes on the jobs is better but with so many people on these sites, the risk escalates because of the size and complexities of the job. And those clients are the likes of CPB, John Holland and Bouygues Construction, if there’s an issue big players don’t want a little insurance company with no real backing. With UAA being in Australia is a key issue for us.

George: Relationships are important. For example, Shawn bought a brand new crane and picked it up at the weekend but the insurance hadn’t come through, we were able to provide cover over the weekend. Some of the technical aspects of these major projects can include some ambiguity and greyness in the appropriate covers. Shawn knows he can pick up the phone and call me directly to better understand if certain issues are covered or require additional cover. We provide support directly and through the broker as well. As a business, UAA understands mobile plant, machinery and cranes in particular.

Shawn: Unfortunately, most people are sick of dealing with insurance businesses and banks. From our perspective we’ve got a really good insurance company and bank and I like dealing with both. I think you’ve always got to remember that it’s the people not just the industry.

George: Michael and I talk to Shawn on the phone and we catch up at least once a year, particularly at events like the CICA conference. In doing this, we learn what’s going on in his business and in the industry at large, particularly when you talk about technology and the changes it is bringing. As an insurance company these meetings help us understand what the new risks might be, what changes we might need to make to our policy wording to suit the new needs of the industry. That relationship is really important because as the industry changes and becomes more technically aware, we need to evolve to be innovative around the insurance product that we sell as well as providing the right services around that product. We need to ensure that we have the right cover to suit the need in the industry as it continues to evolve.

Shawn: CICA events are important and the businesses that turn up to the meetings and the annual conference, including UAA, show me that they actually want to learn about the industry and not just sell to it. If you don’t attend and understand what’s going on, you’re really basing opinions on hear say and statistics. If a supplier is genuinely aware of the changes that are happening in the industry and how much safer we can make it, a business like ours feels more comfortable dealing with them. Interestingly, I don’t see other insurance companies putting in the time and effort at these CICA events that’s for sure.

Michael: Yes, I think an important point is that we specialise in this sector. We are not an insurance company that touches multiple products and multiple assets, our heritage is cranes and our policies have been specifically designed for machines that lift. We’re Australian, you can pick up the phone and speak to us as opposed to competitors that are limited to certain numbers regarding claims and then they hand it off to a syndicate in London. They tend not to care about relationships it’s all about the mighty dollar.

Shawn: Specifically designed policies make a big difference – UAA offers a really great package.

George: Our products and services aren’t just about damage to a machine, they also cover the risks associated within a crane company and can relate to machines hired on a short-term basis. It can relate to the types of goods that they are lifting and the value of those goods. For example you can be lifting a $2million MRI scanning machine which most other insurance companies wouldn’t automatically cover, where we would. Multiple crane operations where more than one crane is lifting, we provide automatic cover because we understand the industry. We are talking about business interruption insurance. We offer lease payment protection as most crane operators will finance a very large crane, very few will pay cash. The lease payment protection is straight forward, if the crane is damaged and not working, we’ll continue to make the lease payments whilst it’s being repaired. But that’s a big deal because the lease payments might be up to $15,000 a month and for the larger cranes $30,000 to $40,000 a month.

Shawn: You can imagine, if you’re a small or new business, and you have an incident and your crane is off the road for six to eight months, finding the repayments could send you broke. You can make savings whilst the crane is out of action, but if you’re not providing a service your customers won’t wait and might not be there when you’re back on the road. It doesn’t matter if you are a small or big company, having equipment out of action is a very difficult issue to manage.

Michael: Crane operators like our policies because they have been specifically designed for plant and equipment, especially cranes. To have all the different covers we have mentioned, you would normally have to engage numerous different insurers. With UAA, you can get them under the one policy. The big difference is, if you had three or four different suppliers providing these covers you would have to go each with a claim, and that’s a nightmare for crane operators and owners.

Shawn: That kind of ‘umbrella package’ is like us. Why do customers come to Borger Cranes? Because we offer small, medium and large cranes, a crane for every application and we have a relationship with the customer. We want the same from an insurance company, it’s about being offered the right packages and having the right relationships to go with them.

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