If you’re one of the people in this world who don’t feel sorry for the insurance industry, you certainly won’t be alone. Premiums seem to just go up and up, no matter how long you’ve been driving and how many claim-free years of driving you have. For commercial fleets the challenge is even tougher, especially for those travelling cross-border.
But let me ask you this question…What do you think is the average claims to premiums ratio? That is, the average percentage of premiums received by the motor insurance sector that is paid back each year in claims pay outs?
Take a moment to do a straw poll in your office too. I’d say you have a range of between 10% to 40%?
Well, the average is actually 77.9%1. But it was as high as 86% as a European average in 2009!
That means that some countries, such as Germany were well into the 90% claims ratio.
This was driven by a sharp rise in both the number of insurance claims between 2005 to 2009 and the value of settled claims. In both cases, 2009 was the highest with total of 55 million claims, representing €98Bn in pay-outs.
This was a double-whammy for the insurance industry that not only made a loss in 2009 but also had to cope with a drop in insurance premium revenues for the year and continued softness in the industry for the next few years.
The key thing that most of us are unaware of is that the insurance industry works in a 6 to 9 year cycle, where they predict future trends in premium revenues vs. claims and that’s why we see years of strong competition with relatively low premiums and then years of painfully high premiums (based on recuperating losses).
But why did this huge upward trend occur, especially in the overall value of pay-outs? One of the factors is insurance fraud, which varies country-by-country from around 3.5% to as high as 24%!1. Insurance companies also claim that up to 50% of these fraudulent claims are due to deliberate crashes2.
Now, we are not advocates for the insurance industry, but simply trying to explain the background to the issues with insurance being faced by business owners and fleet managers today. But there is a way to protect your fleet from these fraudulent claims and mitigate the never-ending and crushing rises in insurance costs in the last few years.
For many years there has been a justifiable focus for fleet managers on improving vehicle and driving efficiency. The kind of elements that telematics focuses on are:
These systems offer very advanced data on all aspects of the vehicle and driving characteristics. For large fleets this is vital data. But even for these large fleets, the issue of monitoring the vehicle visually remains unanswered. For smaller fleets or small businesses with a single or handful of vehicles, these systems are simply too costly.
This is where Camera-Based Vehicle Tracking comes to the rescue!
Cost-effective enough to sit alongside the advanced telematics systems on large fleets and cheap enough to be affordable to even the single-vehicle business; the key advantage is that not only can you fully track any vehicle, but you can fit up to 8 cameras for 360-degree recording. If your fleet travels across Europe, then a hard disk based system allows for uninterrupted recording for up to 30 days.
But the main advantages of these systems is:
So what does this all mean for you? Well let’s take this scenario:
One of your drivers is in France. Suddenly you receive an email alert. The truck has exceeded the 3G you set as a limit, which means an emergency stop situation has happened. You immediately logon to the monitoring software and quickly find the incident in the list of alerts. You click to watch the video from just before the incident occurred.
You see the all angles of the videos and can also see that the driver had his indicators on to go around an obstacle in the road and that there was nothing alongside him when he started the manoeuvre. All of a sudden you see a car accelerate into the empty space just as the driver is committed to the manoeuvre and so the two collide.
You immediately call the driver and inform him to stay calm and take all the other driver’s details. You then call your insurance company and tell them that you believe an attempted fraudulent incident has happened.
You download the video footage and related vehicle data and send it to your insurer, who uses it to clear your driver of any blame in the incident and therefore safeguard your NCB.
You simply can’t do this with a £/€100 dashcam and it’s why many insurance companies are now stipulating that companies must fit vehicle cameras of a guaranteed spec and quality.
Protect your fleet and drivers today. Book in a webinar-based demo of the system with our link below. You simply won’t believe how affordable these systems are!