Keeping a lid on fleet insurance costs

Richard Hipkiss, Fleet Operations’ Managing Director, outlines some of the key steps businesses can take to help reduce their fleet insurance premiums.

Insurance remains one of the biggest elements of fleet TCO (total cost of ownership), typically only topped by depreciation and fuel.

Furthermore, premiums are continuing to rise – a trend triggered in no small part by new technologies, such as advanced driver-assistance systems (ADAS). While such innovations can help reduce the risk and severity of accidents, they are also increasing vehicle complexity, which in turn is leading to more expensive repair costs.

Unfortunately, insurance is one expense that cannot be avoided, but it can be managed – and doing so can have a significant impact on the business bottom line.

Here we bring you eight tips to help reduce the cost of your fleet insurance.

1. Ensure you have the right type of cover

As with individual motor policies, higher levels of fleet cover generally equates to higher prices.

Consideration should therefore be given to the value benefits that supplementary extras will bring.

Unless you suffer a high number of windscreen claims, for example, paying for repairs independently may be more financially prudent than adding the cost of windscreen protection.

The flexibility of ‘any driver’, rather than ‘named driver’, policies may be attractive for some businesses, but spreading a driver’s risk across all fleet vehicles can also prove costly. This option should be discussed with the insurer, as some ‘any driver’ policies will also allow for high risk drivers to be named to specific vehicles.

In addition, combined policies that wrap up fleet insurance with public and employee liability should also be considered. In some cases, economies of scale may be realised. Shopping around, as always, is imperative.

Finally, it should be remembered that insurance cover vs cost can occasionally appear counter-intuitive. The cost disparity between fully comprehensive and third party cover, for example, will invariably be negligible. This will usually make fully comprehensive policies the more cost-effective option for small to medium-sized fleets.

2. Risk assess your fleet drivers

It is in the interests of both fleet businesses and insurers to work closely to assess and manage risk. This means analysing claims history to identify areas where improvements can be made.

Fleet risk assessments should be undertaken as part of this process.

Profiling drivers will not only help highlight opportunities for immediate savings – a cheaper over 35 policy may be arranged, for example, if appropriate to the age demographic – but also the problem areas that should be addressed to reduce future claims.

Prevention is better than cure and by identifying high risk drivers, steps such as driver training programmes can be initiated to reduce their future risk profile.

In the short-term, it may even be preferable for some of these drivers to have their own individual policies to reduce the fleet premium.

3. Realise the benefits of telematics data

Insurers recognise that reductions in collision rates, and ultimately claims costs, take place over a sustained period of time where there is an ongoing commitment to road safety.

They will consequently look favourably on those businesses that have robust, sustainable road risk management policies and procedures in place.

Telematics systems can constitute an integral element of such procedures. While not a silver bullet in themselves, those fleets that work closely with the data they generate can realise significant benefits.

Monitoring and acting upon driver behaviour data to work collaboratively with drivers can have a significant impact on claims and some insurers will even offer upfront discounts where telematics is being used to underpin driver improvement initiatives.

4. Introduce effective policies and procedures

With medical and legal bills an integral element of insurance costs, effective reporting systems, accident management and claims handling is essential.

Processes should also be in place to ensure that every accident is investigated, whether the driver is at fault or not.

Vehicle camera systems, which can be integrated with telematics, can help identify non-fault incidents to minimise pay-outs and save on claims handling costs.

Policies and procedures should reinforce a company’s safety culture, with drivers at fault for collisions receiving advice, training or disciplinary action.

5. Request your authenticated claims experience

Your authenticated claims experience is a standard industry form that details how your fleet has performed, typically over the past three years.

The document will provide an insight into your fleet insurance experience, outlining the number and frequency of claims made, premiums paid and premiums outstanding.

Requesting this form on renewal will suggest to your existing insurer that you are considering placing your business with a competitor and may consequently encourage them to offer you a lower premium. Comparative quotes should always be sought.

6. Increase your excess

As with standard car insurance, increasing your fleet cover excess will usually reduce your premiums.

The benefits of doing so must, of course, be balanced against the increased cost burden when claims are made. If you run a fleet with a good claims history, however, this can be a good option.

7. Self-insure your own losses

For large fleets and companies with deeper resources, there can be a financial case for only insuring third-party losses.

This calls for putting money to one side to pay for your own losses, but requires careful calculations – setting the estimated cost of losses against the premium to cover the risk.

The move can ultimately save a business on insurance premium tax (IPT), broker’s commission and insurer’s expenses.

Companies looking to take this approach should have effective risk management programmes in place, alongside robust accident management processes.

8. Control the process

Fleet managers should also consider the different options available to control the vehicle repair process. This should include implementing effective cost-control measures to avoid unnecessary repairs, reducing expenditure through effective repairer placement and using the most cost-effective repair methods.

By adopting such practices, fleet managers will also benefit from greater control over their vehicle off road times – the hidden, and often more costly, element of the repair process.

To find out how Fleet Operations can help you keep a lid on fleet insurance costs, speak to one of our experts. 

EMAIL US: advice@fleetoperations.co.uk

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