Category: Fleet News

Many fleet managers are now looking to fix the cost of their company car insurance premiums like they might their mortgage to avoid rising prices.

This is the discovery of leasing company Arval, which said it is increasingly seeing this as a trend among business owners of all sizes.

What is an insurance premium?

An insurance premium is the payment made by an individual or business to maintain an insurance policy, covering various personal or commercial risks. These premiums can be for policies related to health, auto, property, and more. If the policyholder does not make timely payments, the insurer may choose to cancel the policy, ending coverage.

How an insurance premium works

When you enroll in an insurance policy, your insurer will charge you a premium, which is the amount required to maintain your coverage. Policyholders typically have several payment options, including monthly or annual installments. Some insurers may also require a full upfront payment for the entire year before coverage begins.

The cost of the premium is influenced by various factors, including:

• The type of coverage selected
• The policyholder’s age
• The geographical location of the policyholder
• Any prior claims made
• Considerations of moral hazard and adverse selection

These elements together help insurers assess risk and determine premium rates.

The process of fixing insurance premiums

Insurance companies rely on actuaries to assess risk levels and determine premium rates for individual policies and groups of policies. Although advanced algorithms and artificial intelligence are transforming pricing and sales, human actuaries remain essential to the process. These professionals employ mathematics, statistics, and financial theory to evaluate the economic implications of potential risks associated with a policy or portfolio. They utilise computer models to review historical data and predict future trends, enabling them to set premiums that ensure profitability while remaining competitive.

After establishing premium rates, insurers use the revenue generated from their customers to manage liabilities linked to the policies they underwrite. Many also invest these premiums to achieve greater returns, which can help offset the costs of providing coverage and maintain competitive pricing.

While premiums for life insurance are typically fixed for the insured’s lifetime, vehicle insurance frequently adjust premiums. Increases may occur when a policy period ends, particularly if there have been claims made or if the overall cost of providing coverage rises.

Insurance companies can invest in a variety of assets with different levels of liquidity and return. However, they are mandated to maintain a certain degree of liquidity at all times, as determined by state insurance regulators, to ensure they can meet claim obligations.

Finding the best price for a fixed premium

Many consumers find that shopping around is the most effective way to secure the lowest insurance premiums. This can be done independently with individual insurance companies or through comparison sites that present quotes from multiple insurers, making it relatively straightforward to obtain quotes online.

For instance, the ACA allowed uninsured individuals to explore health insurance options on its marketplace. When accessing the site, users must provide basic personal information, including their name, birthdate, address, and income, as well as that of other household members. Users can select from various policies available in their state, each with differing premiums, deductibles, and copayments. Providers determine premiums based on the enrollee’s location, personal history, and other relevant factors.

Alternatively, individuals can consult an insurance agent or broker who works with multiple companies to find the best quote. Brokers often facilitate connections to various types of insurance, including life, auto, home, health, and liability. However, it’s crucial to be aware that some brokers may primarily be driven by the commissions they earn from sales.

What do insurers do with the premiums?

Insurers utilise the premiums collected from customers and policyholders to manage the liabilities associated with the policies they underwrite. Most companies also invest these premiums to achieve higher returns, enabling them to offset certain costs of providing insurance coverage and remain competitive in the market.

How often do you pay for insurance premiums?

Most insurance companies offer flexibility in premium payment options, allowing you to choose between monthly, quarterly, or annual payments. This flexibility helps policyholders manage their budgets according to their financial situations. Some insurers may provide discounts for choosing annual payments or for having telematics installed, while others might charge additional fees.

What Are the Key Factors Affecting Insurance Premiums?

More technology equals more expensive repairs.

The company explained that with the advent of newer vehicle technologies such as driver assistance and sophisticated headlights, premiums are rising because repairs are proving more expensive in the event of accidents.

Indeed, it cites a report from the Association of British Insurers showing that claims for repair costs in the first quarter of 2019 were £1.2 billion, the highest on record.

Arval UK head of insurance Ian Pearson pointed out that even vehicles typically classed as basic and mainstream are increasingly having advanced equipment fitted as standard, which is pushing up insurance prices.

“There are fleets that work very hard at controlling their risk and have improved safety and reduced their premiums as a result, but even they can have little influence over repair costs,” he said.

Benefits of opting to fix insurance premiums

Mr Pearson added that he believes opting for fixed price insurance products is going to become more popular among fleet owners as they seek to cut costs without compromising on cover.

“It does mean a shift from the normal fleet insurance mindset, but there are a whole range of advantages to securing cover in this way,” he concluded.

Ellie Baker, brand manager at Fuel Card Services, comments: “Although much of the new technology being added to modern vehicles is aimed at improving safety, it’s unfortunate that this is resulting in another expense for the business owners that manage fleets.

“However, it’s good to see there are alternatives to unexpected costs and that fleet managers are already capitalising on them. We’ll be interested to see if fixing insurance prices does, indeed, become a trend.”

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FORS Fuel Expert is proud to be working with the Fleet Operator Recognition Scheme (FORS) to sponsor the upcoming workshop “FORS Practitioner Recertification“.

Taking place in Croydon on 25 June 2019, the workshop will run throughout the day from 09:00 to 17:00. The workshop is open to FORS members only. Lunch will be provided to delegates attending both the morning and afternoon workshops.

What’s on offer?

The Practitioner Recertification workshop has been introduced for Practitioners whose certification is expiring.

This one day workshop offers current Practitioners an ideal opportunity to refresh their knowledge and understand the changes to the FORS Standard. It will provide delegates with a series of informative updates on previous Practitioner workshop subjects, as well as an insight into the specific evidence needed for the new Silver and Gold requirements.

Please note before booking your place that eligible Suppliers (ie those with expiring Practitioner qualification) attending FORS Practitioner Recertification workshop will be charged £150 + VAT.

The FORS Practitioner Recertification is only open to FORS members who achieved FORS Practitioner status between 2012 and the end of 2014 – therefore whose qualification has already expired, or is expiring sometime this year. You will not be able to attend this training session unless you meet this criteria.

Get in contact with our Major Accounts Manager and FORS practitioner Rachel Pearson. Find out how FORS-registered members can save up to 10p per litre on diesel with a discounted fuel card.

The daily commute can be a stressful affair, with heavy traffic, pressure to arrive at work on time and thoughts of the day ahead.

That said, IAM RoadSmart believes there are some simple steps all drivers can take to reduce the amount of stress they feel on their way to work.

 

Expect the best but be prepared for the worst

 

Here are the IAM’s top tips:

• Plan your journey – We all have certain routes we like to take to work, but keep abreast of potential roadworks or disruptions that mean an alternative might be the better option.
• Stay alert – Busy roads can be hazardous, especially when in stop-start traffic. Make sure you are alert at all times and you are regularly checking your mirrors for vulnerable road users, such as cyclists or motorbikes.
• Carry out regular vehicle checks – Maintenance is key to cars running smoothly, so always check tyres, oil and fluid levels to reduce the risk of suffering a breakdown.
• Keep an eye on the weather – Poor conditions can drastically increase journey times, so always keep up to date on the weather and leave extra time to reach your destination if needed.

IAM RoadSmart head of driving and riding standards Richard Gladman concluded: “Our daily commute can become the time we pay the least attention to our driving – don’t let yourself become complacent. Plan it as if it was a new adventure each day and try to keep your concentration levels up.”

Ellie Baker, brand manager at Fuel Card Services, comments: “The daily commute is a journey that many abhor, but by leaving extra time and planning ahead, you can limit the amount of stress it causes.”

More than 100 UK business leaders have taken part in a summit as part of UN Global Road Safety Week.

The Driving for Better Business Private Sector Leadership Summit was held earlier this month. It aimed to highlight the efforts of UK businesses and bodies to reduce the number of deaths seen on the nation’s roads each year.

Businesses at the centre of UK road safety

Speaking at the event, chief executive of Highways England Jim O’Sullivan stated: “We expect drivers who use our roads for business to have the highest standards of driving and compliance. There is no doubt that their companies have a role to play in this, not just for their own employees but right through their supply chains and business networks.”

A host of representatives from some of the largest automotive manufacturers and UK transport-focused bodies were in attendance.

Guests included Mandeep Dhatt, executive director of HR at McLaren Automotive, chairman of the Health and Safety Executive Martin Temple and James Haluch, managing director at Amey Highways.

“Promoting safe, sustainable mobility is now more important than ever as companies look to reduce both business risk and their impact on the environment,” argued Simon Turner, campaign manager for Driving For Better Business.

He concluded that leaders must now be seen to be upholding the most robust policies to ensure compliance with existing legislation and have a firm grip on their fleet activity.

Ellie Baker, brand manager at Fuel Card Services, comments: “Safety should be a top concern for every fleet manager in the UK. Businesses have a crucial role to play in maintaining the standard of their vehicles and ensuring their drivers are responsible road users.”

Volvo has announced the latest new model to be released as part of its major range overhaul – the third-generation S60 saloon R-Design Edition.

A premium mid-size saloon model, the new R-Design addition is described as being “generously equipped”.

Sporty and refined in equal measure

Developed to buck the trend of traditional thinking in design, this latest iteration is powered by Volvo’s 250hp T5 turbo petrol engine and is sportier than its predecessor.

It couples this with the marque’s eight-speed automatic transmission and front-wheel drive, to ensure “responsive and efficient performance”.

Meanwhile, premium features of the model include a driver’s head-up display, rear-view camera, front and rear parking sensors, heated steering wheel and a 600W 14-speaker Harman Kardon surround sound system.

Outside, the conservative lines of the S60 highlight the manufacturer’s aim of creating an uncluttered and refined aesthetic that will appeal to a wide range of road users.

Jon Wakefield, Volvo Car UK managing director, said: “Focusing on our brand strengths of design, technology and safety, we are confident the S60 has the potential to perform strongly in what is traditionally a very competitive market segment.”

He added the success of the manufacturer’s mid-size range – most notably its V60 estate and XC60 SUV – means there is growing appetite for updated models, like the S60, in the UK.

The new Volvo S60 will cost £37,920 OTR and will be available for UK buyers from May.

Ellie Baker, brand manager at Fuel Card Services, comments: “The new S60 R-Design Edition is sure to prove popular with fleet managers across the UK. It’s utilitarian design and high-end finish make it a top choice for many fleets.”