It stands to reason: the more a fleet is doing to minimise the number of accidents it has, the less an insurance company will have to pay out. It can predict its forward costs more accurately because incidents are being measured and monitored and, so the theory goes, can offer fleets lower premiums.
According to Jack Brownhill, director of Motor at Groupama Insurances, while the fleet insurance market has remained pretty stable for the past few years, the heightened focus on corporate responsibility has created an increase in the attention paid to risk management.
He said: ‘Employers now know all too well that they need to bear greater responsibility for the actions of their company car drivers. More insurers are now at least encouraging, if not insisting on, varying degrees of risk management by fleet operators as part of their fleet insurance cover.’
Putting together a risk management package as required by an insurer should not just be a token act – it has to be relevant to the size of the fleet and how it is used.
Brownhill argues that the key is to ensure that it becomes every day practice for the business – particularly if there are frequent changes in the drivers employed.
He continued: ‘If risk management techniques are adopted on an on-going basis it will not only reduce the fleet operator’s exposure to corporate liability but should also have a beneficial effect on the cost and efficiency of the fleet.’
Brownhill reckons that if fleets are incurring fewer claims due to the introduction of risk management techniques, fleet insurers will regard them favourably in the coming years, which will have a beneficial effect on their insurance costs and structure.
He added: ‘For the vast majority of fleets, the priority when selecting insurance is the transfer of unlimited liability for personal injury and death arising from a road accident. Accompanying this is the exposure to claims from damage to other people’s property as well as claims for economic ‘disturbance’ that can come from claims of this type.
‘Virtually all fleet operators will therefore arrange third-party cover with an authorised insurer. Some larger fleets will retain some of the risk themselves (via an excess) in exchange for a reduction in the cost of insurance.’
However, when it comes to damage to or loss of the company’s own vehicles, attitudes to insurance tend to vary according to the type and size of the fleet, and it is here that a firm’s attitude to limiting the amount of repairs needed to its own vehicles can have a huge financial impact.
Brownhill continued: ‘Large fleets, particularly those with their own repair facilities, are unlikely to buy own-damage cover. Another option, as is the case with third party cover, is to only insure own damage costs over a certain amount – either at the single claim level or as an annual amount.
‘In terms of cover, choosing insurance for mid-sized fleets can be more complex. For many fleets in this category, when linking insurance cover with risk management, it’s worth getting a few quotes of differing levels of cover.
This enables you to compare and contrast not only on price but also what is on offer and allows you to choose the right cover for your fleet.
‘Unless they have a very poor track record of own-damage claims, smaller fleets are unlikely to see any financial benefit from insuring purely on a third party basis. This is particularly the case where the fleet consists of relatively new and/or expensive vehicles.’
Brownhill recommends that fleet operators do not overlook what a fleet insurance broker can provide in terms of service.
He said: ‘Unsurprisingly for most, if not all, fleet operators, having a vehicle off the road undergoing accident repair or, potentially, being the subject of a total loss is an absolute drain on fleet expenses. Arranging insurance with an insurer that is able to respond effectively to these situations is crucial and the advice of the professional fleet insurance broker can make a vital difference, he said.
Of course, if you implement a good risk management strategy with the support of your insurer, these situations might even be prevented from occurring.
Brownhill added: ‘It is important, whatever the size of fleet, that a key part of the insurance evaluation process should be checking how risk management expertise is provided and who by.’
Some insurers use in-house expertise whilst others, such as Groupama use specialists such as Peak Performance, Fleet News Award Winner for the last three years.
He said: ‘With fleet insurance and risk management so inextricably linked, working with a fleet broker, a good fleet insurer and their risk management experts is the best way to implement a risk management strategy relevant to the size and scope of your fleet. This will take you a long way forward in meeting your corporate responsibilities.’
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