Fleet operators have been warned to expect significant rises in their insurance premiums unless steps are taken to improve risk management and reporting.
Teletrac Navman is launching a new campaign, in conjunction with its insurance consultancy partner Jelf, to highlight the importance of risk management and ensure the fleet industry takes action to limit the impact of recent changes to the Ogden rate.
The Ogden rate, also referred to as the discount rate or personal injury rate, is used to calculate future losses in personal injury and fatal accident cases.
When courts assess compensation awards they take into account how much interest could be earned based on the discount rate.
Since 2001, this had been set at 2.5% meaning this amount is discounted from the compensation insurers would pay, but from March 20 this year, the Ministry of Justice changed the discount rate to -0.75%, meaning initial payments from insurers will be significantly higher.
John Marks, sales director at Jelf, said: "This change makes it inevitable that there will be an increase in premiums.
“No business wants to incur additional unexpected costs. With proper planning and a positive approach towards risk management there are steps that can be taken to help reduce the potential impact.”
Teletrac Navman and Jelf recommend fleet operators can control insurance costs by:
- Proactively using telematics software – to gather evidence on how you’ve improved risk management
- Consider introducing integrated cameras – which can prevent accidents and highlight instances where drivers were not at fault
- Improving driver behaviour – implement processes and review meetings with drivers to reduce speeding and excessive cornering and braking
- Considering whether your vehicles are fit for purpose – could your fleet use smaller vehicles if they’re operating on narrower roads or smaller depots, thus reducing potential accidents?
- Reporting – fleets must provide evidence of risk management when renewing their insurance premiums
Peter Millichap, UK marketing director at Teletrac Navman, added: “Insurance premiums remain one of the largest overheads for fleets, however many operators will not become aware of rising premiums until they come to renew their policy.
“Our campaign highlights how businesses can take immediate steps to minimise costs, as well as improve the overall safety and performance of their fleet.
“Telematics is a critical tool in analysing and improving risk management, however fleets must actively use the software in order to reduce premiums.”