PREMIUM BLUES
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The recent merger announcement between the Norwich Union and the CGU did not come as a great surprise to those in the insurance industry.
The rationale behind these mergers is invariably the same—to be a truly global player you must be a global sized company. Combined, the CGU and the Norwich Union will have assets over 1.200bn, and even this does not put them in the World's top 10! So how is all this going to affect the UK haulier? The answer, I am afraid, is "in the pocket".
In the merger document, just sent to the shareholders, the new board of directors has stated their aim to be "only interested in markets that deliver value for our shareholders". In other words, they are only going to concentrate on classes of business where they can make money.
Haulage insurance. unfortunately, has not been such a market for many years. Despite the recent 25%-plus rate increases, the insurance industry continues to leak money when insuring trucks. The main reason behind such losses is the spiralling rate of compensation being paid following road accidents. Larger haulage vehicles are invariably deemed to be "at fault" and the courts seem happy to pay over 13,000 for even the most minor whiplash injuries.
Once you add repair costs into the equation, it's easy to see how claims have been outstripping premiums by 30% or more for several years. The market has now contracted to such a degree that those companies that are left in are simply unwilling to continue losing money.
For the haulage contractor then, the best advice is to do absolutely everything in your power to cut your claims. Regardless of your claims experience, you will be facing a 30% rate increase this year, but if you allow your claims to run out of control then the sky really is the limit premium-wise, when renewal approaches.
Driver training, security measures, accident cameras. rear-view CCTV. "How am I driving?" stickers—all cif these may play a part in your risk management programme, and a good broker should be able to point you in the right direction.
This year, for the first time in recent memory,just shopping around with lots of different brokers is not going to cut your costs. All brokers end up approaching the same insurance companies and, if anything, when underwriters see the risk from more than one broker, this can actually reduce your chances of obtaining favourable terms.
A few brokers have some specialist schemes which are worth a try but in the long run your premium will follow your claims, so risk management really is the only long-term solution to this annual headache.
Peter Blanc, Director. FMW Insurance Services, Chelmsford, Essex.