With a significant increase in crane incidents, insurance premiums are on the rise. George Grasso, Underwriting Agencies of Australia (UAA) Group Chief Claims and Service Officer explained how the crane industry can help by committing to upskilling its work force.
“We’ve seen a significant increase crane incidents this calendar year compared to last year. In terms of numbers, we’ve had an increase of 21 per cent of crane incidents,” George said.
“When you take into account UAA was managing a significant number of flood damage claims this time last year, this is not a good development. In terms of dollar value, claims have increased by 30 per cent, and it’s a developing situation.
“An element of the 30 per cent increase is due to inflation, but the 21 per cent increase in incidents has made a significant contribution to increased costs, one way or another,” George said.
“All claims vary of course, but an alarming example is the number of crane roll overs. We’ve had an increase of 48 per cent of crane rollover claims – all operator error – compared to 24 per cent of losses last year, so the trend is not good,” he said.
George discusses UAA’s position on this development and how the industry can help itself and the insurer.
“We understand the industry is facing many challenges. There is a significant skills shortage, there is lack of experience in some areas and the industry is increasingly busy. There is also a reduced ability within the industry to provide the competency-based training which is obviously required. All these factors may have caused a potential drop in a ‘safety first culture’,” he said.
“It’s one thing highlighting to UAA and other insurance companies premiums are increasing, but there are reasons for this. As a business, we have to increase our rates to accommodate losses being incurred by the industry, otherwise the business becomes inviable and unsustainable.
“In addition, our securities, the companies that back us, examine our portfolio and see that cranes are having an impact and questions are being asked. Is this the new norm? Is it an anomaly? What are we going to do to recover these costs? Are we going to continue to support the crane industry?
“Our view is UAA will continue to support the crane industry, as it is our heritage, it’s where we first started, and we’ll continue to support it. But we can only continue if the industry helps us by recognising that these incidents are occurring, at an increasing high frequency and at high costs,” George said.
“The industry needs to work together and find ways to reduce this exposure. We had a discussion with Brandon Hitch, CEO of CICA, and he mentioned CICA’s Articulated Mobile Crane Driver Education Course will receive key funding through the National Heavy Vehicle Regulator’s (NHVR) Heavy Vehicle Safety Initiative, supported by the Federal Government. Brandon said the HVSI funding would enable CICA to deliver the Articulated Mobile Crane Driver Education Course and improve heavy vehicle safety for drivers.
“UAA is very excited about this opportunity, and we are hopeful the industry welcomes it with open arms. I don’t believe there’s a fee for customers to get their operators trained on the basics of competencies for articulated cranes.
“UAA and CICA are going to work together to ensure crane companies take advantage of this course and upskill their pick and carry operators wherever possible,” said George.
Premium Option
With crane companies putting their operators through this type of training and receiving certificates of competency, UAA might also look more favourably at premiums.
“Reducing premiums will occur when we start seeing a reduction in incidents,” George said.
“It is not an issue that can be fixed overnight, we need to see a trend over a two to three year period. UAA is able to reduce its premium rates when cranes are being operated safely, and there’s no need to increase rates unnecessarily,” said George.
“We have margin targets in place as a budget, but we’re not greedy and we don’t increase premiums just for the heck of it. There are reasons why we increase our premiums and in the current environment, it’s due to the increase in incidents and increasing repair costs.”
These costs are beyond the control of the industry and also UAA, said George.
“It’s just a global issue, particularly when it comes to supply and demand, currently there’s high demand and low supply, commodities have gone up in price, there is a delay in the supply of parts and an increase in claim and repair cycle times,” he said.
“These things are out of our control, but the issues within our control are safety, avoiding the high levels of incidents, embracing appropriate competency training and supporting initiatives such CICA’s Articulated Mobile Crane Driver Education Course.”
“Incidents involving articulated pick and carry cranes are UAA’s highest frequency claims in our portfolio. It is problematic,” he said.
“The incidents can be catastrophic and life-threatening to the operators as well as other third parties working around them.
“At the end of the day, the key message that we want to make is that we’ll continue to work alongside the industry to help reduce risk and incidents and we’ll find the incentives for doing so,” he said.
It is important for UAA to continue working closely with CICA and the industry in general, said George.
“We believe the industry has to manage the issue of how to best operate articulated cranes in a self-regulated environment. The last thing we want is an unworkable process being mandated where articulated cranes are transported to sites on low loaders for operation.
“We have the opportunity to continue to operate them on the road, we need to work together to ensure continued self-regulation and create an environment that allows businesses and operators to operate these cranes in a safe manner,” said George.
“We’ve seen over many years crane companies view their articulated crane as the lowest value asset in their fleet. When a new starter joins the business, the culture has been to put them in the least valued asset despite them being the most challenging crane to operate.
“UAA hopes training and upskilling programs like CICA’s Articulated Mobile Crane Driver Education Course will encourage crane businesses to train a generation of dedicated drivers for articulated cranes which will go a long way to addressing the number of incidents we are currently seeing,” said George.