Currently, fleets can estimate their fleet size and pay a premium based on their claims experience and risk profile. If the European Commission sanctions the proposals, however, the new directive will end this practice of blanket corporate insurance policies for motor vehicles. This is not a problem on the continent, where national vehicle registration and insurance rules clearly identify every vehicle covered by an insurance policy.
The UK, however, has developed the concept of blanket insurance documents to ensure that vehicles are always covered, while avoiding the administrative minutiae that would be required to register officially with an insurer every new vehicle that joins a fleet and removing every vehicle that leaves a fleet. A 1,000-vehicle fleet, for example, will typically add 300 new vehicles per year and dispose of a further 300 - creating 600 insurance registrations per year under the new system. But the directive goes even further, covering any demonstrator vehicles and daily rental vehicles driven by employees if the cars are covered by the corporate insurance.
This will create an enormous difficulty for fleet managers to establish procedures whereby drivers notify their fleet departments of the registration details of hire cars and demonstrators prior to driving them. Alternatively, fleets could accept the more costly option of buying the insurance cover offered by their daily rental suppliers. Failure to record these registration details could leave vehicles and employees without insurance cover. At insurance giant Marsh, Ian Johnstone, associate director, transportation practice, has already presented the issue at a regional meeting of the Association of Car Fleet Operators.
'At the moment, fleets do not have to keep accurate day-to-day records, but the new directive means fleet operators will have to track registration numbers, including temporary vehicles and demonstrators,' he said. 'Insurers are looking how this can work, and need pilot projects to be running by mid-2002. This will be an onerous task. We are issuing advice to our clients and we will soon advise them how it will work in practice.'