Experts advise on motor fleet insurance

“In recent years, we have experienced the GFC and the subsequent recovery, increasing fuel costs, a contracting driver pool and severe weather events. Furthermore, all of these have taken place in a small market with high levels of competition.

“The nature of the heavy motor insurance industry also means that it can be counter-cyclical to the overall economy. As the economy winds up, more freight has to be moved under tighter deadlines. At the same time, the resource boom can drag skilled drivers to mine sites for higher pay. As a result, transport operators are under increasing pressure to get the right people.

“All motorists experience frustration with the ongoing cost of fuel, but when it represents around a third of your business overheads (approximately 20% for a local carrier and 40% for a long-haul operator), it’s a greater area of stress.

“These business stresses impact the risk profile for transport insurers. This means the perceived risk quality can change over a relatively short period of time, because drivers, margins and even contracts can also change.

“It is imperative that underwriters and brokers approach each risk uniquely to ensure products and policies are tailored to suit each individual risk.”
‘Driver attitude and behaviours’

Kevin Redman, Corporate Motor Fleet Risk Engineer, CGU
“Fleet managers have a lot on their plate. There is a lot of pressure applied to things like vehicle safety, being green, government compliance, asset and supplier management, and driver education.

“Today, the biggest issue is risk management – particularly when it comes to driver attitude and behaviours.

“The drivers are the largest risk area in any fleet. We must understand who they are, their attitudes, and their levels of knowledge and skill. We also need to understand a driver’s knowledge of their vehicle and the environment in which they’re driving.

“Being able to identify these attributes and address those can be difficult and potentially expensive.

“New technologies are emerging that have the potential to effectively deliver driver assessment, education and training. However these must be implemented at the start of the hiring process, as part of induction. There is also an emphasis on identifying drivers who are more likely to be at risk, but who have not had a vehicle incident or infringement for some time.

“A fleet manager’s broker and insurance company should play a major part in providing information and tools to assist in risk management. A collective effort will ensure that today’s driver is better informed and trained to accomplish their tasks.”

Published – Insurance Risk & Professional Jun-Jul 2011