Fleets to stay despite premium hike

Link: Fleet special report

More than half of those experiencing rises have seen increases of 11-20% during the past 12 months, with a further 27% being forced to accept increases of up to 10%, according to the survey, which was run on AccountancyAge.com throughout last month. A further 18% have been faced with premium increases of more than 31%.

Yet the survey, carried out by Accountancy Age in conjunction with insurance claims management company Town & Country Assistance, reveals that almost 70% of companies still have fully comprehensive insurance for their car fleets. This is reduced to 40%, however, for vans.

What’s more, few revealed that they had any plans to reduce their company car fleet in the face of the rising premiums. For a significant proportion, in fact, it was quite the reverse.

When asked: ‘Do you think your company/firm will still be running a company car fleet in two years’ time?’, well over half of the respondents replied in the affirmative, with a further 21% expecting their fleet to grow.

So much for rumours of the death of the company car! Indeed, a mere 14% of respondents expected their fleet to be reduced and just 8% expected it to be scrapped altogether.

The reason for this appears to be that two-thirds of finance directors claim that they are either already pursuing a proactive strategy to reduce their motor insurance premiums or have plans to do so within the next 12 months.

In fact, the survey reveals that more than one in five companies already outsource their motor claims handling, 17% their uninsured loss recovery and a further 15% their third-party claims handling. A significant 18% benefit from an accident management service that includes all these, as well as motor accident risk management.

When it comes to what further action companies would be willing to take to reduce their fleet insurance costs, our survey revealed that changing their broker was the favourite option with 42% of finance directors, 93% of whom continue to co-ordinate their fleet insurance through a broker.

Other favoured options included carrying out a more detailed assessment of accident risks (25%), driver training and an increase in the level of their excess (both 23%) and a greater degree of outsourcing their motor claims management (14%).

Respondents were generally unenthusiastic about adopting an alternative strategy, such as self-insurance, to reduce their fleet insurance costs.

They tended to disagree that self-insurance would be too complicated to administer, but were largely non-committal about whether it would do the trick. They were also unsure about whether any reduction in their motor insurance premiums through outsourcing their motor claims management would be offset by the fees.

‘This survey provides an extremely valuable snapshot of what is happening to UK firms which have company car fleets at a time of rising motor premiums,’ says Theodore Agnew, Town & Country’s chief executive.

‘Many finance directors are facing severe pressure to reduce their fleet costs, which is usually the second largest overhead after the wage bill.

As a result, they are looking to find a solution.

‘We do feel that if motor insurance premiums continue their relentless rise many finance directors will be forced to take increasingly drastic action to stem the rise.’

But of course it’s not all about insurance, safer driving is vital too.

One-third of UK traffic accidents involve a company car or commercial vehicle, yet company cars make up just 15% of the country’s driving population.

Safe driving campaigns are one way of mitigating that risk – and they can improve driver performance, too. Back in 1995, following a media blitz on road rage, the ‘How’s My Driving?’ campaign was launched for commercial vehicles. The basic idea could not have been simpler. A sticker on the rear of commercial vehicles invited any driver to ring a call centre number if they felt the urge to comment, favourably or unfavourably, on the way the vehicle ahead was being driven.

In the context of fleet management, this kind of campaign has attractions as part of an overall approach to reducing corporate risk. John Ascroft, head of risk services at the RAC, says: ‘You can hardly open the pages of the fleet or corporate press without coming across a reference to corporate liability. The company vehicle has been defined as a place of work, so it comes under the Health and Safety regulations just as much as a piece of machinery.’

Nigel Rolf, head of sales and marketing at Arval PHH, agrees. ‘We have to recognise that the incident rates on fleets mean that any one driver has about a 40% chance of having an accident each year. The statistic for private drivers is just 14%. So something needs to be done, even granting that these are not all fault-related accidents.’

• Michael Karwowski conducted the research on behalf of Accountancy Age and Town & Country Assistance. – For more fleet news and analysis go to www.accountancyage.com/ .