INSURANCE hikes could hit fleets this year as a result of motor industry legislation and increasing costs, according to Arval PHH.

The fleet management group believes the fifth EU insurance directive, uninsured drivers and increasing bodyshop costs will play a part in pushing premiums upwards.

Mike Waters, head of market analysis at Arval PHH, said: 'The continuously changing face of legislation and EU compliance is putting additional pressure on insurers, and the likelihood is that these higher costs will be passed on to fleets as an increase in premiums.'

The firm believes a clause in the fifth EU directive, which will see fleet insurers picking up the tab for any pedestrian or cyclist hit by a fleet car, is bound to affect premiums, despite the legislation not being introduced until December 2004.

From February this year changes to the Motor Insurers Bureau (MIB) could also be an influencing factor, according to Arval. The amendments mean that anyone who has property damaged by a stolen car is entitled to compensation.

However, Waters believes that fleets can compensate for any impending rises. He said: 'It is vital to analyse risk and manage incident costs. For example, fleets can often reduce premiums by raising their excess, but they must have processes in place to manage those costs that then fall below the excess.'

The news comes exactly a year after studies revealed fleets had been hit by insurance premium increases totalling millions of pounds.

Some saw increases of more than 40%, in the survey completed by Fleet News in conjunction with Town & Country Assistance.

Half of all fleets experienced increased insurance premiums in 2001/02 as insurance firms reassessed their approach to the risk of covering fleet business.