Insurance premiums are one of the many overheads fleet operators are faced with. It's incumbent upon firms, then, to find ways of minimising the insurance burden as much as possible. Technological advances in recent years – such as telematics – have been crucial to reining in fleet insurance premiums by allowing for an enhanced approach to both driver development and risk management.
We spoke to John Marks, sales director at our insurance partner Jelf, about what's happening to fleet insurance premiums and what fleet operators can do to keep premiums down and make the long-term changes necessary to address risk.
Q: What's happening to fleet insurance costs, and what are the causes?
John Marks: The recent Ogden rate change is a game-changer, basically. It means serious life-changing injury awards are going to increase significantly, meaning insurance companies are going to have to increase premiums. We're now in a situation where the market is facing huge increases, even on decent and low-risk premiums.
We discussed this with a large group of hauliers, and the main message to come out of that was that now is the time to mitigate the likely impact on business of these potential higher claims. To do that, you need to be looking at risk management. You need to be looking at what you're doing. You need to keep your claims down. This rate change really is a very significant shift.
Q: What do underwriters consider when reviewing commercial fleet policies?
JM: Claims experience is the first thing. How you're performing, the frequency of incidents and what costs have been incurred. Also, then you look at the type of operation – what industry are they in? Are they running large or small vehicles? The type of goods they carry can also be a factor depending on what they're into. A fleet of petrol or diesel tankers is going to be far more risky than someone who's delivering concrete slabs.
Some insurers are contributing to risk management. By risk management, I mean certain elements – for example, it could be training – but they're not giving an automatic discount just for using telematics. You have to be proactively using it and have evidence of how it helps you manage risk.
Q: What advice do you have for businesses looking to mitigate risks that impact fleet insurance premiums?
JM: Risk management programmes, basically. I know that's a generic statement because it encompasses so much now, but there's electronics that you'd look at and there's other stuff like driver profiling. If you're not looking at risk management and doing something about it, higher costs are going to bite you hard.
Q: Which technologies are particularly effective at managing fleet risk?
JM: Those who use cameras or telematics always see a drastic improvement at the start, but it's important to remember that having data is only a small part of the equation. Being able to provide evidence that the data is being used and that it is positively impacting risk is what we’re really looking for.
I recently heard from a solicitor who worked on the awful Glasgow lorry disaster case. Because of the severity and the loss of life, the investigators went in full barrel and didn't leave any stone unturned. In these situations, it is critical to be able to demonstrate that appropriate risk management processes were in place, the collection and use of data to assess drivers is often a good way to achieve this.
A lot of the bigger companies we work with are now employing their own driver trainers and using the information they get from systems like telematics to try and encourage better driving. A few insurers have started driver profiling with e-learning modules – and this has been quite popular because it highlights driver weakness, and can allow companies to identify where extra training may be needed. They have online modules they can bolt on to allow them to train. They then have an online record that the driver's completed the training. It gives businesses the ability to take a more proactive approach to better, safer driving.
Q: What measures are businesses taking to help rein in insurance premiums?
JM: The use of telematics, in-house investigation work, and identifying types of incident that take place. One company recently discovered that its vehicles were having lots of knocks and bangs – nothing too serious – on one particular job. When they investigated further, they realised that the vehicles were just too big for the job, because of where they had to go. They therefore put two smaller vehicles on that particular job and the problem no longer occurred, bringing the number of incidents down to zero because it was easier to get the vehicles in and out.
But again, it's about tying processes in with the management of risk. Those who ignore this ignore it at their peril – and I can tell you, from the examples I've seen, it's really not worth it!