Fleet interest in fixed cost motor insurance is on the increase because newer vehicle technologies are raising premiums.
That’s according to leasing company Arval, which cites a report from the Association of British Insurers that shows repair costs in the first quarter of 2019 were the highest on record.
This is attributed to features on new vehicles that are costly to repair, such as advanced driver assistance systems and sophisticated headlight designs.
Arval UK head of insurance Ian Pearson said: “There is little question that the advanced equipment being fitted as standard to even mainstream vehicles is having an impact on repair costs which, in turn, is starting to have an effect on premiums.
“While we are in favour of the fitting of most of these devices, which are generally designed to promote safety, they do make the repair process more expensive in terms of both parts and the time taken to fit them.”
According to Pearson, the situation is having an impact even on fleets that employ advanced and successful risk management strategies, and therefore have low accident rates.
He said: “There are fleets that work very hard at controlling their risk and have improved safety and reduced their premiums as a result but even they can have little influence over repair costs.
“Of course, those fleets that already have a poor claims record are being even more adversely affected.”
Pearson claims that these factors have led to an increase in demand for fixed price insurance products such as Arval’s own Total Care, and that these could form a blueprint for a new fleet approach to insured vehicles.
He said: “Certainly, we are seeing interest from fleets growing in Arval Total Care. It does mean a shift from the normal fleet insurance mindset but there are a whole range of advantages to securing cover in this way.
“It is our belief that it represents something of an innovation and that other companies in the sector may soon start to offer something similar.”
Source: Business Car