Mark Merrell, head of Corclaim, looks at the world of insurance claims.
Getting the right insurance cover at the right price for a commercial fleet has never been easy or straightforward. However, with claims rising and competition eroding margins, some insurance companies are pulling away from the sector leaving fleet operators with less choice and less buying power.
Aviva is the latest insurer to be criticised by brokers for taking a ‘swingeing approach’ towards its commercial fleet business, amid accusations that the company is shedding accounts and forcing through rate rises in an attempt to scale down its £100m exposure to commercial fleets.
As a result commercial fleet operators are being offered less favourable terms. Premiums are rising along with elements of retained risk in an attempt to keep premiums in line with previous rates. In addition to which our experience is that some fleet operators are beginning to recognise the need to do things differently to drive down their overall indemnity spend whilst maintaining the cover they require.
Many will employ good risk management programmes including regular driver training aimed at reducing the number of at fault accidents, along with behaviour management training, which can help to keep fleet drivers and their vehicles safe in a variety of high-risk situations. Some larger fleet operators opt to negotiate a service agreement with a network of garages so repairs can be carried out promptly and at discounted market rates.
However, many fleet operators continue to ignore areas such as the recovery of its outlay or losses in no-fault accidents. All to often fleet operators or their advisers assume that only the larger losses are worth pursuing, put off by the thought of getting into a potential dispute with the at-fault driver’s insurance company and the prospect of litigation with all its resultant costs, some fleet operators prefer to write off such recovery opportunities.
While some reluctance to get embroiled in such disputes is understandable, it is often based on a misunderstanding about the extent of any litigation costs that might apply. Most disputes of this nature are likely to be treated as ‘small track’ claims which applies to cases with a value of below £10,000. This means that any legal costs will be limited to a fixed fee sum, which is based on a sliding scale but is usually only £80. A fee is payable in order to issue any court proceedings and if the claimant loses the case that fee cannot be recouped, but that expense usually amounts to no more than £100.
Spotting and pursuing all recovery opportunities is also something that some fleet operators may not be able to do with full effect because it is often not something that they necessarily have as part of their skill set.
As a rule of thumb, if you multiply the size of a fleet by 6-10% that will give you an approximate guide to the number of recovery opportunities a typical fleet will generate each year.
Based on a fleet of 1000 vehicles, for example, the fleet operator can usually assume that they will have in the region of get 60 - 100 potential recovery.
With an average recovery value of £1000 -1200, it is easy to see how the value of claims of this nature can tot up for larger fleets, justifying the use of specialist loss recovery firms some of which are capable of handling all aspects of the dispute, from negotiating a claim to bringing a litigation action.
The world of commercial fleet insurance has changed and operators need to rethink their approach to obtaining cover and keeping their overall costs as low as possible. For some, the time may have come to take action to reduce unrecovered costs – after all, not to do so means that fleets are shouldering the cost for all accidents including those not of their making.