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21st September 2006
Page 51
Page 51, 21st September 2006 — UPFRONT DISCOUNTS
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Which of the following most accurately describes the problem?

Martin Ecott, divisional director at specialist commercial vehicle insurance broker Heath Lambert Group, believes that until insurers can see exactly what they may get out of telematics and the degree to which its use will reliably reduce actual claims, the industry can only carry on basing premiums more on past claims than anything else.

"We all believe telematics will have a positive effect — but at the moment, nobody really knows what that effect will be." he says.

This isn't all bad news for vehicle operators hoping to cut their premiums. Although it means there may not be any up-front savings to be gained by fitting fleet management-type teiematics systems, those fleets that have them and use them to improve their drivers' performance probably will eventually reduce their claims record and enjoy better premiums, says Ecott.

Not only that, but the body of evidence they gradually build up to show that telematics does help reduce claims will eventually help sway insurers' perceptions of it.

"The more companies that do that and the more information insurers have that shows a real claims reduction from fleets that have fitted telematics, the sooner we'll get to a point where insurers will see a reduction in their cost of risk going forward," says Ecott.

"In the meantime, fleets that can show a reduced claims record do eventually get the discount — even if it's not upfront."

This does, of course, present something of a chicken-and-egg situation: insurers won't give upfront discounts until there is evidence from operators that claims really fall; on the other hand, operators may feel disinclined to fit telematics systems until they can be sure that such systems really pay their way, including in terms of insurance costs.

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