With a poor economic outlook there will likely will be an increase in crime, including theft of vehicles. Vehicles stored or laid up for extended periods will be prime targets for opportunistic thieves. Simple tracking devices are now available at very reasonable prices and are well worth consider installing.
Aggregation of values with numerous vehicles located together when laid up will increase the risk of larger losses from hail, flood, fire and theft.
These exposures, which have been managed by industries such as motor dealers and car rental firms will now be faced by many fleet operators. These clients will seek guidance from their risk advisors on physical risk protection as well as financial risk protection, such as a maximum per event excess or sum insured. I.e. does the $1,000 per unit excess apply to all 50 units hit by a hail storm - making a $50,000 excess?
Over the next couple of years there will likely be a glut of second-hand vehicles on the market, which will see vehicle values fall. This would be particularly so in the medium and heavy refrigeration space where the core hospitality client base has been so devastated.
The value of lighter commercial vehicles may not be so hard hit, as the requirements of small parcel/home delivery services picks up the demand left by the hospitality and retail space.
The Basis of Settlement, particularly the finance loss payout extension will be seen as somewhat more important. It is vital now that the amount allowed above market value is maximised and that the cover does not contain exclusions of this benefit for fire or theft losses.
Laid up cover
Most insurers will now be referring to a "laid up'' style offering. Brokers need to make sure that they aren’t accepting a reduction in coverage when the goal is to obtain a premium discount reflecting reduction in exposure when vehicles are laid up or simply spending less time on the road.
Vehicles still need third-party property damage for the occasional use on roads moving around and in yards - however the premium should reflect this exposure and be minimal.
The now somewhat old fashioned “3rd Party Fire and Theft” may not be the most appropriate cover and most insurers should offer comprehensive cover for similar premium charge.
Comprehensive cover is going to provide additional protection for matters such as impact, malicious damage, hail, flood and other water perils.
A move to anything less than Comprehensive cover, is probably a breach of the clients’ insurance obligations if there is finance on the vehicles.
Broking in the hard market and helping insurer’s measure exposure
The key approaches to broking in a hard market are even more relevant now, with many clients looking at containing all of their costs - including their motor insurance.
Many clients will have a significant reduction in vehicle utilisation and in turn risk exposure, without necessarily having vehicles “laid up”. Brokers should find ways to demonstrate to insurers that the fleet exposure really has changed and that consideration of a lessened renewal or new business premium is warranted.
The more measurable the indicators of reduced exposure the better. Many clients will already have data available, already prepared for other purposes, which is very useful in gauging exposure variations. For example year on year quarterly comparisons of turnover from the clients BAS returns, driver wages payments from Workers Compensation declarations or fuel burn rates from fleet management systems would all be measures of exposure variations that will be expected over the next year.
Clients need, more than ever sound advice from their brokers.
At Fleetsure we always aim to provide brokers with whatever tools needed to deliver better solutions to clients.