Austbrokers City State Rail has been active in the rail sector since 1995. Previously trading as Austrail Insurance Brokers, the organisation has cultivated a reputation for negotiating specialised policy conditions to suit the rail industry.
Brian Barreto is the director of Austbrokers City State Rail and with more than 25 years’ experience in the industry, he recognises the importance of the company’s deep understanding of the rail sector when it comes to sourcing the right insurance.
“Some insurance companies can be put off by the rail industry, but we understand it is an incredibly safe and reliable sector,” he said.
“Our specialties lie in the civil rail space which includes maintenance and construction of infrastructure. We have clients of various sizes who are both principal contractors and sub-contractors.
“We have a diverse mix of clients who work in and around the rail space.”
Austbrokers City State Rail also works closely with the heritage rail industry to support its sometimes complex insurance needs. The company has created a specialised product for this sector to support its growth.
Barreto explained that rollingstock is a part of the rail sector that some insurance companies can be wary of insuring.
“It is easy for an insurer to walk away from this because when they think rail they assume that any loss would be significant and consequential,” he said.
“But when you have a good understanding of the rail sector, know the checks and balances that are in place, and the whole safety framework of the industry, insurance companies are more comfortable.
“The fact we have supported the industry for this long and formed relationships with insurers to ensure the rail sector is covered is testament to our hard work and understanding.”
Working with rail companies
Barreto and his team understand the critical role they play as a conduit between companies of varying sizes and insurance businesses. He broke down what the company does when someone is looking for insurance as it moves into the rail sector for the first time.
“The first thing we need to establish is the company’s risk profile,” he said.
“Once we establish that we then ascertain where they sit in the industry to give us a comparison. This also allows us to understand where they sit in the contractual framework and understand if they are the principal, which can mean they are carrying considerably more risk.
“We look at both ends of it, so we look at the contractual law and the exposure to common law.”
Barreto explained that Austbrokers City State Rail will look at the company’s assets, the value of those assets and what the exposure of those will be.
“From that point we start building a profile and then we can get a liability aspect and understand if there is a risk transfer possibility,” he said.
“We investigate the risk and understand whether they can retain it themselves and what tolerance they have to manage risk themselves. We then look at what they go to market with and ensure that is insured from a material damage perspective.
“After this is when we roll up our sleeves and get to work negotiating with insurers for an outcome.”
Barreto said that while businesses can be in the same industry, there is intrinsic differences between them. He said this knowledge is critical to sourcing the right insurance for a business.
“Our goal is to never walk in and assume we already know what a company might need,” he said.
“We carry a lot of knowledge in that area and sometimes it is difficult when you think you already know what they need. But I have been doing this long enough to know you don’t know everything, so we have to listen.
“It is critical we absorb what each company is about because if you do not listen to them and you are louder than they are, you will miss something critical.”
Barreto explained that the company understands the complexities of a business which can include those that work across multiple industries – often the case in civil construction.
Depending on the type of projects the company works on, Austbrokers City State Rail will regularly review the insurance program – sometimes every four to six months – to ensure the coverage remains for the work being completed.
“For other businesses we can have a good grasp of the work they do so we do not need to check in as much,” he said.
“Once again, it is all about meeting the needs of the individual business.”
Working across every network
Barreto said that the challenges the rail industry faces with interoperability are the same in the insurance space. Each state, with differing rules and regulations, poses difficulties when identifying the right insurance for someone operating in multiple states.
“We need to be across what is happening in each of those states and that is why our team is continually growing in the rail space, to ensure we have that coverage and understanding,” he said.
“We see some consistency across states, particularly in the contract space. But there are definite differences that we work through in each state and again we lean on that experience and expertise to get through it.”
The importance of good insurance
Having spent much of his working life in and around insurance, Barreto emphasised the importance of the right insurance program for businesses, particularly in rail.
“Having the wrong insurance program could be devastating to a business,” he said.
“If we have missed something critical in the initial stages of setting it up, a problem could cost millions of dollars and that can be devastating to any business, regardless of size.”
He also explained that a lot of insurers will not always pick up on contractual liability that may be evident.
“Most insurers do not understand that this contractual liability is evident in the rail space, so we often recommend that anyone in the rail space carries blanket contractual liability,” he said.
“We have come across a number of people in the rail space operating without contractual liability completely unaware of the risk they are running.
“There are a lot of potential issues out there in the market that people need to work through. A robust insurance broker can rectify these problems and ensure anyone working in the rail space has what they need.”
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