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SECURITY AT A

11th January 2007
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Taking steps to protect your vehicle from would-be thieves earns you lower insurance premiums, doesn't it? Well, no.

David Harris reports.

Investing in truck security makes vehicles harder to steal, but that doesn't seem to help when it comes to insuring them. UK truck insurers are notorious for failing to offer lower premiums to hauliers who invest in greater security.

One reason is that trucks, unlike cars,do not yet have a nationally recognised security rating. Only CVs under 3.5 tonnes are currently rated and they are classified under a system that was updated in November by the Motor Insurance Repair Research Centre at Thatcham.This uses a five-star system, with two separate measures based on how hard it is to steal the vehicle itself and how hard it is to steal property from the vehicle.These are known as 'theft of and 'theft from' ratings.

Norwich Union, the UK's biggest commercial vehicle insurer, says a good rating might give a 10% reduction in the premium, but a discount on vehicles under 3.5 tonnes is not much use to haulage companies operating big trucks. And here the news is not very good: Norwich Union confirms that there is no real discount for trucks with better security.

If the insurance industry's Vehicle Security Steering Group goes ahead with plans to introduce a security assessment system for all trucks, the insurers' attitude to discounts might change. However, despite agreement in principle last year there is no firm timetable for introducing the new system.

Don Armour, the Freight Transport Association's security expert, says: "As things stand I don't think the industry is getting a fair payback for investing in modern, more secure vehicles.' The Society for Motor Manufacturers and Traders (SMMT) agrees it has long argued that hauliers have little incentive to enhance security on new models because they receive no reward from insurers (CM 6 April 2006).

For the time being, the only payback seems to be making it less likely that your truck will be stolen.This is clearly an important benefit, but insurance brokers confirm that while making trucks more secure might make them less vulnerable to thieves, it does not save any money on the annual insurance bill.

Specialist road haulage broker John Peers says most insurers base their premiums on vehicle weights and take little notice of security measures. They do look at the role of the vehicle -so tippers and tankers have higher premiums for example but I've not seen any cases where things like tracker systems or immobilisers attract a discount," he remarks.

Nor does Peers believe such discounts will be available any time soon: "It would take one of the big truck insurers to start doing it so that others felt they had to in order to compete. But I can't see anyone doing so at the moment."

This might be partly about insurers maximising their profits, Peers admits, but he adds that they also want to cut down on bureaucracy: It isn't like the car market, where they now go into such detail that they ask what the colour of your car is, and where a Ford Escort GL might attract a higher premium than another model of Escort.The truck market is much less variable."

If a desire to cut down on paperwork is one reason the truck insurance market has less variation than the ear sector, another is that most fleets are insured in their entirety. Premiums are calculated not so much on the individual components, but on the historical claims record of the company that runs the vehicles.When hauliers change the make-up of their fleet this broad-brush insurance policy can even work in their favour.

Peers explains:"Last week I rang an insurer on behalf of a client who was substituting a 26-tonne grab-lorry with a beavertail of a similar weight because he was switching to hauling some heavy plant.The new lorry was clearly in a higher risk category because of the nature of the work it was doing, so it should probably have attracted a higher premium, but the insurer just looked at the fleet record and said everything would remain the same.This obviously pleased my client, but it didn't make much sense."

The only factors insurers do take into account apart from the size of a vehicle, says Peers, are age, value, where it is based and where it has to travel for its daily work.

This means the main way hauliers can reduce their premiums is through a no-claims bonus, which usually builds up to a maximum 50% over four years.

Let's copy cars

If the insurance system for trucks was to change, Peers would prefer it to move a little closer to the way cars are assessed but with not quite so much minute detail required in the insurance application.

"It would seem sensible to give a haulier credit if he has better braking systems, or immobilisers or tracking equipment, but there is also something to be said for simplicity," he argues. In any ease, it seems unlikely that truck insurers will start asking hauliers about the colour scheme of their vehicles.

But even in the short term it is probably worth enquiring whether your insurer is willing to offer a discount on your premiums if you have installed particularly impressive safety or security equipment.

Peers believes that if one insurer breaks ranks to reward hauliers who have taken the trouble to protect their fleet better, others will be forced to follow. For the UK haulage industry, which has lower profit margins than almost any other business sector, the more pressure there is on insurers to offer any savings they can, the better. •


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