Practical Car & Van Rental has developed the system called Riv@l (Rental Insurance Validation) which controls the company's exposure to risk by calculating a variation in insurance excess for every vehicle rented.
It means that the lower the risk a customer represents, the lower the excess required. Riv@l can also suggest minor adjustments for variable factors such as the weather and volume of traffic.
The new system incorporates online credit checking facilities, address verification and Practical's own customer database, built up over the past 17 years. The programme has gone through a successful pilot phase and will be operational at all of Practical's 160 outlets within months.
Although the system was developed by Practical to protect its self-insurance programme from heavy re-insurance renewals, the company believes Riv@l will become a benchmark for mandatory requirements across the industry.
Bolton Agnew, managing director of Practical, said: 'With underwriters consistently making losses in this area and becoming increasingly selective over the business they write, renter validation is a number one priority.
'By making this risk management commitment ahead of the pack, we are not only securing the future of our business, but developing a significant competitive advantage.'
Riv@l is conditionally available to any independent UK rental company on application.