Taxi Industry has potential to transform its safety record

With anywhere between 119 000 and 200 000 taxis on South Africas roads the value of the taxi insurance market is projected to top R4 billion and has the potential to transform South Africas transport industry, according to Cre8, a division of Alexander Fo

Empowering fleet owners with the incentive and security to maintain and manage their taxis could greatly improve the safety of vehicles and reduce accident figures.

Murray Steyl of Cre8, a division of Alexander Forbes believes that, "The road worthiness clause on insurance policies should be defined, failing which underwriters may refuse claims for non-essential faults such as a cracked windscreen or a damaged rear light."

"Developing an insurance package that actually offers something tangible in terms of real benefits to taxi owners has been an immense challenge, but we're getting there."

Government's taxi recapitalisation program will see thousands of new taxis hitting the streets each month. Since these will be largely financed through independent finance houses they will require insurance.

Steyl, who has been in discussion with taxi associations from the outset continues, "Given the shortage of statistics, we tried to make things simple by putting ourselves in the shoes of taxi owners and asking: 'What are the risks that taxi owners face?', and, What needs do taxi owners have?"

The answer was CommutaCova, an insurance policy that enables taxi owners, firstly, to manage loss or damage to their taxis and, secondly, to help them cope with liabilities that may arise as a result of loss or injury to other parties.

"By putting the taxi, which is the lifeblood of the business, at the centre of our understanding of this market we were able to refine our definition of road worthiness to; steering, breaking and tyres, plus, considering loads, suspension and shock absorbers."

"In this way the contract is simplified so that owners know what cover they are buying and what they can claim on, administration costs are reduced and managing and monitoring the product is made easy".

The cover includes normal mini-bus taxis as well as shuttles and traditional meter taxis.

At the moment Steyl is educating brokers about CommutaCova and talking with finance houses dealing with taxi recapitalisation. He is also looking at ways for Taxi associations to develop and manage independent pools of investment capital. Properly deployed, this capital could increase the safety and efficiency of the private transport industry in South Africa.

Steyl concludes; "While we have a lot to learn there is no doubt that this is just the beginning of what will become one of South Africas biggest insurance sectors."