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26 Feb, 2019|

Average Price of Fleet Insurance: What Affects Your Costs?

Irrespective of the size of your fleet it is more important than ever to get the right fleet insurance for your business. Legislative, financial and social factors are all contributing to an upward trend in vehicle operators’ costs as well as the unknown impact that Brexit may have on the industry. We spoke to Steve Blackmore, Director at Anthony Jones, to get his expert view.

He told us that the insurance industry continues to feel the impact of rising claims costs influenced by several factors:

– Continued high costs of personal injury and credit hire claims
– Increased technology in vehicles leading to higher repair costs
– The claims culture in the UK; particularly related to whiplash claims as well as credit hire

With rising costs coupled with uncertainty over Brexit, we could potentially see a more restricted insurance market with fewer and fewer insurers quoting for areas and risks which are more claims heavy.

Being aware of what influences your fleet insurance costs can be key to helping manage your risks and therefore claims frequency and help you obtain a premium of a level that offers best value for your business.

What are some of the key factors that influence the cost of your fleet insurance?

There are many factors that are likely to impact the cost of your fleet insurance. Steve points to three factors that will have a big impact on costs:

Your claims history

According to Steve this will be the biggest factor in your insurance costs. Claim’s frequency, how many claims you make across your fleet, as well as cost, whether the claims are of high or low value are two of the big factors to think about.

Don’t make the mistake of thinking that high cost claims alone will impact your premium.
Steve adds “If a fleet has a high frequency of smaller claims, this can have as much of an effect on an insurers view of the risk as risk that has had one large, high cost accident during the year. From an insurer’s perspective, if a fleet has had a high number of small fault accidents the risk profile suggests an increased chance of a large accident happening in the future and suggests that there are a lack of controls in place”

Your risk management procedures

How you manage risk will be a significant factor when it comes to fleet insurance and the willingness of insurers to take on your businesses risk.

This can include factors such as:

  • How you manage your drivers and monitor driver behaviour
  • The culture embedded in your business by management – do your leadership team display the risk attitude expected of your whole     business?
  • Telematics solutions – does your business have a solution in place and importantly how do you use the data to affect change to your risk factors?
  • Dashcams – these can be forward, side and rear facing and are used to immediately confirm who was at fault
  • Inbuilt vehicle technology such as lane assist and AEB
  • How quickly claims are reported

The better your risk management strategy, the likelihood is that you will see an improvement to your claims experience

Trade industry involved

The trade or industry that your fleet business operates in will also have an impact on your premiums.

Steve illustrates this well “Couriers for example will be ordinarily be rated higher than other trades. Couriers typically work under high pressure, making multiple drops to meet tight deadlines. The added pressure and need to drive at speed increase the risk compared to other trades that may undertake regular pre planned fixed journeys.”

Whilst you can’t change the industry that you operate in you can look at your risk management procedures as we discussed above and ensure that these are truly embedded in your businesses culture to enable you to gain the best value for money premium.

What can your fleet business do to reduce your insurance costs?

Steve believes that the most important thing a fleet business can do to influence their fleet insurance costs is risk management

Managing your risk is so important if you want to keep control of your costs. Around 90% of accidents are down to driver error and could therefore be avoided. Be focused and proactive. Introducing a strategy four weeks before renewal following a bad year will not stop your premium from going up. Most insurers will want to see two, in some cases even three years of improvement before this results in reduced premiums.

Technology will of course play a big part in your ability to manage risk. Embedding technology such as telematics etc isn’t enough however, you need to really make use of the data it provides. Typically, we find that the more advanced a customer is when it comes to their implementation of risk management technology the more of a positive impact this will have on their claims experience. Insurers take much more of an interest nowadays in the technology you embed within the business and how you use it. Vehicles fitted with AEB, lane assist, and when the telematics data is being monitored and used to manage the drivers will see a better response and willingness from insurers to take on the risk – and offer a better premium.

Whilst the use of technology can make a difference, how quickly you report claims when they do happen is also so important. Credit hire has become a big problem. The tactic of waiting to see if the third party present a claim are long gone. If you suffer a fault accident, report it to your insurers immediately and they will look to take over the handling of the third party’s claim before a credit hire company gets involved. This enables them to control the costs, from providing them with a vehicle at much better rates than a credit hire company would charge, to controlling the length of the repair. The difference between your insurer capturing and dealing with the entire third-party claim, against leaving the third party to organise repair and hire themselves can be substantial, as much as 5-6 times the cost. A few late reported claims can completely devastate a claims experience “

How do you know if you are getting value for money?

Because of the complexities of fleet insurance, particularly for those operating a large number of vehicles, on the whole fleet insurance is arranged through a broker. Therefore, when it comes to getting insurance at the best value for money for your fleet choosing your broker wisely will be one of the key decisions that you make. It is vital that your chosen broker understands:

– your business
– the insurance markets
– risk management
– legal obligations within the fleet industry.

Steve adds “Buyers should be aware. They need to think carefully about their choice of insurance broker. A poorly managed insurance choice based purely on price can very quickly outweigh that short-term saving. Brokers should be working hard for you during the year, reviewing claims regularly, looking at trends and helping you to react to these so there are no “bad news” stories four weeks before renewal.”