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Crashing Vehicles, Hidden Costs

ARTICLE BY

  • Eugene Herbert
  • Chief Executive Officer
  • MasterDrive

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If they have not done so yet, South African businesses should have reached a critical turning point in perceptions of road safety. Organisations can no longer afford to view accidents as merely unfortunate incidents that are covered by insurance anyway. The true economic impact extends far beyond this, touching every corner of a business’s financial health.

The Road Traffic Management Corporation (RTMC) reports there are between 11 000 and 13 000 deaths in the country each year. Globally, South Africa is ranked as one of the most dangerous countries in which to drive.

Within fleets, accidents have staggering immediate costs which, when quantified correctly, can equal anywhere between R48 000 for minor crashes and R5,4 million for more serious incidents. These figures are based on a report written by the RTMC and Council for Scientific and Industrial Research (CSIR) in 2015 – meaning the costs are likely significantly higher.

The iceberg

Crashes have both immediate costs, which are more easily calculated, and indirect costs that are difficult to quantify. Eugene Herbert, CEO of MasterDrive, expands: “Immediate costs are the obvious costs – including vehicle repairs, insurance excess, and medical expenses. Yet, these are only the tip of the iceberg. Indirect costs have potential to dwarf the more apparent ones.

“Indirect costs have a cascading effect: a damaged vehicle means missed client appointments or deliveries, potentially lost contracts, and a damaged reputation. Add the administrative burden of the aftermath, legalities, and the time spent on insurance claims. If employees are injured, costs for recruitment, additional training, and productivity loss can continue for months.”

A rule of thumb is for every Rand spent on direct accident costs, businesses incur an additional R3 to R5 in indirect expenses. Ten accidents annually in a medium-sized logistics company can translate to millions in hidden losses. In certain industries, this ratio can be as high as 1:20.

Productivity forfeit

A particularly damaging indirect cost is the persistent drag on business performance. “Employee morale suffers when colleagues are injured. Vehicle downtime can affect the ability of others to complete duties. Insurance premiums inevitably rise, affecting future budgets. These inefficiencies can make the difference between profitability and financial distress,” says Herbert.

A strategic advantage

A turning point for 2026 should be the opportunity to be a forward-thinking business in road safety. Companies investing proactively in comprehensive road safety programs will see substantial returns on investment. The Webfleet Road Safety Report 2024 estimated that accident reduction rates of 80% are possible with implementation of safety technology and training.

Financial intermediaries play a crucial role in this turning point by helping businesses understand their true risk exposure and identifying appropriate mitigation strategies. “Become strategic risk advisors to clients and guide organisations toward sustainable safety investments that protect both lives and balance sheets.

“Businesses should not ask if they can afford to invest in road safety, but whether they can afford not to,” says Herbert. “All South African companies must recognise the full economic burden of accidents. With a fundamental shift from reactive cost management to proactive risk prevention, the ultimate turning point is safer roads and healthier businesses.”

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