Why fleets fail to use risk reduction tools to control insurance costs

We all know that the chosen level of cover and historic claims performance are the two biggest factors in calculating a fleet insurance premium. Of course, a link exists between these two variables because to keep premiums at a sensible level, a fleet will consider reducing levels of cover in the face of a poor claims experience.

In reality, many fleets now have a ‘distressed’ insurance profile and have started to look internally at what can be done. Indeed, the need to assess what risk is contained within the fleet is now established and catered for by sectors such as licence checking, online assessment and telematics.

For some fleets, assessing the risk is sadly where the initiative ends and the potential downward pressure on fleet risk remains unfulfilled.  There are several reasons why fleets fail to complete the risk management cycle and of course, failing to minimise driving risk will mean continued frustration for both the fleet and the Insurer.

Here are some of the reasons:

  • First, there is a potential difficulty in the interpretation of the gathered risk data.  In other words, what represents an actionable risk and what doesn’t?  What skills and time is required to analyse the results of assessing driving data?  Fortunately, these questions can be answered by specialist risk managers.
  • Second, many company Board members still feel that they can ride their historic luck without investing in an effective fleet risk program and only turn their attention towards reducing driving risk once a disaster or series of disasters has rendered the fleet virtually uninsurable.
  • Third, the assessment phase can in itself have a small positive effect on driving risk, without embarking on any form of remedial action, however, this is a short-sighted and unreliable outcome as the lasting effect of a risk program will only be gained by addressing identified high risk with appropriate action.
  • Fourth,  the ability to decide what would be the most effective type of intervention with high risk drivers should not be underestimated.  The inexperienced eye would find it very easy to misinterpret risk data and for example, to choose a skills-based course for a risk that had nothing to do with lack of skill.
  • Fifth, many fleets use their whole budget on the risk assessment phase and leave little funding or nothing at all for the intervention and remedial action phases.  Looking at the cost of cameras and telematics technology, this mistake is easily made but can be avoided.
  • Sixth, the whole subject can appear too complex and involved as many fleets see the need to set up multiple risk suppliers, receive multiple forms of risk data and consider opening a new risk department internally.  This is absolutely not necessary, however many drivers are employed.

In truth, this whole subject of driver management is relatively new compared to other more established aspects of running a vehicle fleet and is therefore still emerging. Indeed, without years of experience the correct path to success may not be obvious, although, that in itself, does not need to represent another risk.

RVM Assist Ltd is one of the longest-established providers of fleet risk reduction services to the fleet market (see www.rvmassist.co.uk) and offers one of the broadest ranges of consolidated risk solutions, through one contract, via one team, on one number.  Our success is based on keeping things straightforward and consistently demonstrating success for our clients.

Please contact us and ask for details of our fixed price packages.  You’d be surprised by how much value we can pack into our programs.

0113 224 8800 / risk@rvmassist.co.uk / www.rvmassist.co.uk

Paul R Rose – Director

….. anActivate Group” company

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