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C O V E R S TI

22nd August 2002, Page 32
22nd August 2002
Page 32
Page 33
Page 32, 22nd August 2002 — C O V E R S TI
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Which of the following most accurately describes the problem?

Despite current vehicle premium increases being relatively small, insurance costs are still driving many out of haulage. Steve Banner shows how operators can cut down on some of the costs.

H auliers knocked sideways by

massive vehicle insurance premium rises over the last two to three years may get a pleasant surprise the next time their policy comes up for renewal. Percentage increases are more

likely to be in single figures than the 25-35% price hikes many suffered in 2000 and 2001, although poor risks—i.e. those that generate a lot of claims—are still liable to be penalised. The best risks may even enjoy a slight premium reduction.

"I think average, sensible risks will see a 5to% increase this year, and the same again in 2003, to keep pace with claims inflation," says Peter Allott, market development manager at Norwich Union.

There's no room for compla

cency, however, says Geoff Moylan, commercial motor manager at Allianz Cornhill. Rises could start to move well into double figures again in the future thanks to the escalating cost of personal injury claims to insurers, he warns. "The bill the insurance industry is facing is already huge, and it's increasing at the rate of around 13-15% a year," he contends. "Add on the associated legal costs, and you're talking about closer to 20-25%."

A greater willingness by injured parties to sue for compensation and a steep rise in claims as a consequence is one reason why insurance costs soared at the start of the decade. Lawyers offering to represent people who have been hurt in, say, a work-related accident on a no-win, no-fee basis still advertise widely, so those pressures haven't gone away. "What's more, NHS Trust Hospitals are a lot keener these days to exercise their right under the Road Traffic Act to recover the cost of treating road crash victims from insurers," Moylan says. "And NHS charges will increase in 2003."

The possibility that van and truck drivers will be held liable for any harm done to cyclists in a collision—even if the accident was the cyclist's fault—could also increase motor policy claims costs. "I don't think such a change will have a massive impact, but there's bound to be an impact of some kind," he remarks.

All of which means that hauliers must adopt an effective risk management policy if they're to have any chance of controlling insurance costs, he says.

"That includes careful recruitment of drivers," says Chris North, marketing executive at RHA Insurance Services (RHAIS). "Operators should examine their licences, take up references from previous employers, and carry out a test of their abilities before they hire them."

Driver shortage

The difficulty with this, of course, is that there is a national driver shortage. As a consequence employers often have to take on people whom ideally they'd prefer not to employ, because the alternative is that the vehicle stays in the yard. Nobody with any sense wants to employ somebody who is a danger to himself and to other roads users, however, and an orderly recruitment procedure should weed out the cowboys.

A driver training programme should be implemented too, but it must be continuous, North stresses. "There's no point in putting all your drivers through a training programme once, then forgetting about it," he observes. "If you do that, then anybody lured after the programme has been completed will miss out."

Monitor maintenance procedures more closely too, he advises. Bald tyres and brakes that haven't been serviced regularly lead to expensive and potentially catastrophic smashes—and equally won't endear you to the Vehicle Inspectorate.

"Bringing in a bonus scheme that rewards drivers who remain accident-free is another good idea," says Jon Gleave of broker Sagar Insurances.

RHAIS has been closely involved in the development of a risk management system called ICON that addresses these and other areas. Drawn up with the assistance of consultants Road Skills and solicitors Ford and Warren, it's implemented in conjunction with a risk manager who visits the company every six months to ensure everything is going smoothly.

Accident rate

Bring down your accident rate through better recruitment, training, motivation, and maintenance and you can increase the excess on your insurance policy with greater confidence. You'll end up meeting the cost of most minor bumps and bangs yourself, but that needn't cost a fortune if the number is down to a manageable level.

Many policies have a compulsory £250 excess, and it can be worth increasing that to £1,000, says Moylan —it can cut your premium by 10-15%.

Covering older trucks for third party, fire and theft only can also lead to a saving, but it's not a big as it used to be, he states, The differenc in price between comprehensive and nor comprehensive cover is falling all the time, he observes.

"Remember that lessors require truck acquired on contract hire to be insured con prehensively," North remarks. Reviewing th size of the trucks you operate, and runnin smaller ones wherever possible, can also hel reduce premiums, says Moylan. "Swap a. artic for an r8-tonner, and you could cut th cost by several hundred pounds a year."

One of the key reasons for this reduction i that attics tend to be used more intensivel than rigids, he says, and suffer greater exposur to accidents as a result. So any changes in th vehides a firm runs might have to be accompi nied by a change in work patterns if there is t be a major impact on the insurance bill.

Hauliers are still plagued by truck theft, an that too pushes up premiums. Norwich Unio is among those insurers that offers useful di: counts to operators that protect their vehicle with quality security devices, says Allott.

Because accidents often damage loads a well as vehicles, if you improve security, trai your drivers and take more care packing an loading cargo, you'll also face fewer claims o your goods-in-transit policy. Premiums are xi ing here too, although the low cost of COVE compared with truck insurance means that :di effect on firms is at present relatively modes

What happens when vehicle insuranc costs spiral out of control is graphically illu: trated by the nightmare now being endure by hauliers in the Republic of Ireland. Rises < as much as r00% are forcing some of ther out of business, prompting truckers to stage demonstration outside the offices of the Iris Insurance Federation earlier this year.

Personal injury

Very high personal injury awards made by tb courts plus the increasingly litigious nature < Irish society are helping to drive up the co. of cover, says Irish Roa

Haulage As sociatio spokesman, Jimmy Quin] "Fraudulent claims are problem too, and we're hoj ing to see legislation intri duced that will make them specific offence," he says. "I some parts of the country gettir your car in front of a truck and deli. erately putting the brakes on so that ti driver hits you is seen as a good way of ma: ing money. Not surprisingly, hauliers a: rushing to implement accident preventic strategies, and they're taking bigger excess< too."

"It's unlikely that we'd see the situation the Republic of Ireland repeat itself in qui the same way over here because a lot of ti problems can be attributed to the country legal system," says Chris North. Person injury claims will still remain a major expen: for UK insurers for many years to come, ho' ever, and premiums will have to reflect th fact—so prudent hauliers will treat risk ma agement as a top priority.


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