The New Speeding Laws And Fleet Insurance
Article by: Insurance Expert: Tom Butler, Director, Schofield Insurance
The past few years have seen an increasing priority on fleet safety and with good reason. In the most recent Department for Transport reports, traffic on motorways and rural roads are shown at an all time high – with the % of cars, lorries and vans all rising. The provisional figure of 320 billion vehicle miles travelled on Great Britain’s roads in the year ending September 2016, was 1.4% higher than the previous year. Crashes, caused by anything from speeding to distracted driving (e.g. texting whilst at the wheel) can be costly not only to the individual but also expensive to the fleet– with liability capable of spiraling into the millions following the latest, not to mention the significant damage to the fleet reputation.
According to the Confused.com car insurance price index, Car insurance prices have gone up £110 over the past year – a rise of 16%. What’s more, extra pressures set to impact the insurance industry this year could possibly push prices even higher – potentially tipping the thousand-pound mark next year, the index suggests. The data also suggests than men tend to pay more for their insurance policies than women – and with an overwhelming number of fleet drivers’ being male, this is a stat that might well be significant to fleet managers.
There is little argument vehicles are becoming safer - thanks in part to advanced technology, such as anti-collision braking systems, blind spot detection, rear view cameras, and telematics. Fleets often write clauses for dismissal into contracts as further deterrents, for example being caught whilst using a mobile phone. But, in the most recent government report, fatal accidents on major roads (motorways and A roads) increased by 3% to 1,050 in the year ending September 2016. Fatal accidents on minor roads (B, C and unclassed roads) increased by 2% to 650 over the same period. There was a 3% increase in fatal accidents on roads with a speed limit of up to and including 40mph (built-up roads) to 780 and a 5% increase in fatal or serious accidents to 15,340 over the same period.
Speeding offences and in particular offences such as careless driving and/or drink or drug related endorsements can significantly affect insurance premiums for fleets when a claim is associated with the endorsement. For smaller fleets, underwriters are more likely to look at speeding offences and tie them in to increased premiums or excesses. For larger fleets, it’s often less about individual misdemeanors and rather the frequency and cost of the claims made. Of course, many of these claims may well have occurred as a result careless driving and/or speeding or similar.
Our fleet brokers and the underwriters we use refer to a clients 3 or 5 year fleet “Confirmed Claims Experience” (CCE). This details the number of claims made along with the appropriate payments and also the current claims reserves for both the policyholder as well as any third party.
The CCE also enables them to analyse the average cost per claim and average cost per vehicle, which is calculated on the total of claims divided number of vehicles over a 3 or 5 year period and this figure is then inflated to cover insurer costs, commissions, the rising cost of vehicle repairs and third party claims – the latter has dramatically been affected following the 27th February 2017 news of a reduction of the Ogden Rate.
The government lowered the discount rate (Ogden rate), the rate used to determine the value of compensation paid out to a personal injury victim, from 2.5 per cent to - 0.75 per cent. As a consequence motor premiums could sky-rocket as claims reserves have had to be increased.
In addition Fleets without the appropriate “experience” may well be hit with higher costs, simply because they have no proven track record.
Time will tell, but from an insurers point of view, we hope the new speeding implications will indeed minimise the number of incidents and claims. Fleet managers should be aware of the things they can do to minimise premium and excess hikes, including doing a thorough drivers’ license check on any new drivers. Those found with endorsements such as careless driving or drink driving are instantly flagged by underwriters and may be subjected to restrictions or exclusions on a fleet policy - perhaps only being insured for business use, or restricted to lower value vehicles. Installing telematics and tracking systems is a great way to prove that you’re doing your housekeeping as a business, especially if you can show you’re tracking driver style and speed. The ‘big brother is watching’ approach is certainly worthwhile for fleet owners.
Installing onboard cameras hugely assists when settling claims, especially when it is usually the third party legal costs that escalate costs the most.
Comment from Tom Butler, Director, Schofield Insurance