Less miles, fewer accidents: time to challenge your insurer
As company cars travel less since 2020 and the number of accidents were fewer, fleets might expect a reduced insurance premium for 2021. “The better accident ratio is balanced by increased repair costs,” says Ross Jackson, CEO at TraXall International. “Still, there is no better time to renegotiate than now.“
As the vaccination rate across Europe increases and COVID-19 seems to be relatively contained by now, corporates are slowly preparing to go back to ‘business as usual’. Still, it has become quite clear that mileages are likely to remain lower given how the world has adapted to remote working. “That does not mean that insurers will maintain lower premiums. Like all businesses, insurance companies have to ‘balance their books’, so shortfalls in one area can be expected to be addressed from increases in other areas,” Mr Jackson explains.
“As countries move towards the electrification of vehicles, we are seeing premium increases on several electric vehicles, including Tesla, of up to 100% when compared to ‘conventional ICE’ vehicles. While this may be down to increased repair costs, parts availability and other factors, it is a hidden TCO area and one to keep under scrutiny in your negotiations with fleet insurers, as well as in controlling your own fleet’s cost base.”
Challenge yourself, challenge your insurer
Is there no opportunity at all to achieve a motor policy premium reduction? “Yes, there is. The impacts of COVID-19 are well-understood and it is equally known that many organisations are looking at how they can create better/longer term value and reduce costs.”
“However, one of the more silent areas of impact is within procurement teams and supply chains where, in many cases, there simply has not been enough time or resource to manage all contract renewals, extensions or RFQ processes. As a result, some things that are working well are being left alone to continue working well and resource focus is shifting to areas of immediate need.”
“We would call out insurance negotiation as being a key area not to ‘leave alone’. We see fewer corporates actively renegotiating this area at present. Smart negotiation here may pay dividends, so move fleet insurance negotiation further up your list – it might even be one of those legendary ‘quick win’ areas for your business.”
New means trial and error
“Vehicles are becoming more and more digital and the associated technology is becoming more and more expensive; this brings with it new complexity,” says Ross Jackson.
“We must remember that electric vehicles and emerging technologies/power are precisely that – emerging and new. New, in this context, means that while there is some experience of what this means, there simply isn’t sufficient experience and there are ‘unknowns’. We also must remember that things are evolving fast … and perhaps that will also mean that things (vehicles) will date/age more quickly too.”
“Just as leasing companies will see that their initial residual value forecasts were wrong, insurers will learn through their exposure to accidents and repairs where the correct cost point is over time.”
Photo credit, TraXall, 2021