How is your fleet insurance premium calculated?
Your fleet insurance premium will be driven largely by your claims experience. Other rating factors include your occupation, location, driver age profile, vehicle types and use of vehicles, amongst others.
Your claims experience is presented in a table format and it will include the following information:
- Your business name and address
- Type of cover
- Your excess
- Renewal date
- The name of your insurer
- Details of pay out amounts
An insurer needs a copy of your claims experience before providing a quote.
An insurer will compare your claims frequency to that of the aftermarket industry average.
Your loss ratio is unique to you and is calculated by dividing the total amount paid out in claims by the total amount paid in premium. For example, if you have had £5,000 in claims in a given period and you have paid £10,000 in premium, your claims loss ratio is 50%. Calculated as follows, (£5,000 / £10,000) x 100 = 50%. A Loss ratio below 65% is the goal. The lower the better. This is the break-even point for insurers as the remainder is made up of the insurer administration costs.
The Importance of Risk Management
Well managed fleets tend to mean less accidents and lower premiums.
Focus your risk management on drivers – especially young drivers, drivers with convictions, inexperienced drivers and drivers with previous accidents. Implement driver training, driver monitoring/tracking or by implementing a penalty or incentive scheme for higher risk drivers. Audit driver’s licences -preferably at least twice a year. Any serious motoring conviction such as a DD or IN10 would need to be disclosed to and approved by the insurance underwriter, before cover is provided. Any non-disclosure could result in there being no cover.
Invest where possible in technology – Forward facing cameras, Driver facing cameras and Tracking systems. This helps with proving you are not to blame in cases and also improves driver behaviour.