And What You Can Do To Avoid Them
As you may have noticed, motor insurance costs, including fleet insurance, have been on the rise of late. Indeed, according to research by Consumer Intelligence, motor premiums have risen by an average of 15.7% in the last year, a trend that is very much in line with the findings of the latest Go Compare survey which shows car insurance prices having gone up by a 1/3 in the past two years. Frustrating as this is for the average private motorist its obviously significant worse for a fleet operator given the number of vehicles you need to insure.
There are, however, some simple ways to keep your fleet costs down, and we’ll give you some insider’s tips on getting a cheap fleet insurance quote. But first we’ll take a look at some of the reasons behind the recent rises, reasons which lay largely not at the door of the industry, but at Number 11 Downing Street.
Insurance Premium Tax (IPT)
The IPT is was introduced in 1994 as part of the Finance Act and was the government’s way of taxing insurance services which EU law prevented from being subject to VAT. In its first incarnation, it was charged at just 2.5% and rose slowly, if steadily, to 6% by 2015. From September 2015 though the rate of growth began to rocket. With a new government hungry for tax revenues, the then Chancellor George Osbourne, hiked rates up to 9.5% and the rate has now reached 12% with many predicting that yet another rise will come in the Budget in November.
The IPT changes are unavoidable and have already added a significant burden to premiums. While there is nothing that can be done to reduce this burden, you can delay the impact of the next rise by getting your fleet insurance quote before November’s predicted rise.
The Ogden Rate
A year ago, most people – even many in the industry – when asked what the Ogden Rate was would have looked at you blankly. It’s one of those technical mechanisms that lie within many industries but which few pay too much heed to. That all changed on the 20th March 2017 when the rate was changed from 2.5% to minus 0.75%, sending the industry into a frenzy and insurance premiums rocketing. Why? Well because the Ogden Rate impacts on personal injury claims, claims that most commonly arise from motor policies. And with the number of people being killed or injured on Britain’s roads having climbed by 6% according to the latest government’ figures, insurers have felt the need to protect themselves against the long-term costs of injury compensation.
Again, this is change that’s impossible to avoid but it’s not impossible to limit its impact. Being able to provide safe-driving data through telematics systems and, in time, through connected cars, will help demonstrate a lower level of risk which in turn will allow insurers to offer you cheaper quotes.
If, like me, you are old enough to remember the days of double-digit inflation then an inflation rate 2.9% doesn’t seem like much to shout about. The rate is on the rise though and has now hit a four-year high with leading economists predicting it will hit over 3.5% by the end of 2017. Brexit, and the subsequent devaluation of Sterling, have made imports more expensive which have had a knock-on effect on for all industries including the insurance sector.
Long-term predictions of inflation rates are, to a certain extent, guesswork, but the trend to the end of the year is certainly an upward one and what happens in 2018 will depend to a certain extent on Brexit…
Whether you think it’s the greatest opportunity this country has seen in the post-war era or is a case of national self-harm, Brexit is real and is going to affect everything. In terms of insurance it’s giving the large insurers a sense of financial uncertainty that’s making them more risk averse which is pushing up premiums while making them far pickier about the fleet drivers they are willing to take on. There is also concern over the legal framework they are going to be working within once we leave. As mentioned above, the IPT only came in as EU law prohibited the levying of VAT on insurance, for example. Having exited it’s possible that the 12% IPT rate will be scrapped – hurrah – only to be replaced by VAT at 20%. Concerns over Brexit and increases in premiums are already being felt by drivers. A recent Kwik Fit survey found that 43% of its respondents are preparing to see a rise in the cost of their motor insurance and while time will tell, this could be yet another reason to look to get an early renewal on your fleet insurance.
Beating The Fleet Insurance Price Hikes: What Can You Do…
Despite all the gloom there is quite a lot you can do to save money on your fleet policy. We’ve looked into this in-depth here, but our top five ways to save are:
- Renew Your Fleet Policy Early – never has this piece of advice been truer. Will all the existing price pressures and the potential increases in tax and inflation, getting your fleet renewal quote in sooner rather than later could save you a substantial amount
- Install A Telematics System – telematics systems used to be the preserve of large fleets but today a system can be yours for around £15 per month and the data they provide can make a big difference to your costs
- Consider Your Driver Profiles – insurers are looking harder than ever at who is on a fleet policy and if you have young or claims-heavy drivers that could drive your costs up significantly. So, take a dispassionate look at who you are covering
- Invest In Driver Training – nothing will push up costs more than claims and few things will drive down the levels of accidents than having better trained drivers. Driver training doesn’t have to be expensive and can pay significant dividends
- Use An Insurance Broker – Obviously as a broker we are bound to say this, but when things are as tough as this you need someone with the experience and the contacts to find you the best deal on your fleet cover
Like Some More Help?
Well we hope that’s given you some food for thought. If you’d like to know more about saving money on your fleet costs, or would like some help getting the fleet insurance cover that’s right for you, then please contact us. You can call us free on 0800 977 6037, email us by clicking here or get a no-obligation insurance quote here.
Coversure Hull is an independent fleet and business insurance specialist. From our base on the banks of The Humber, we offer comprehensive commercial vehicle cover, with particular focus on fleet and special types, alongside other essential business covers, namely commercial combined and liability.
Since opening in 2005, our combination of superb service and outstanding value for money business policies have established us as the insurer of choice for organisations both large and small.
Coversure Hull: We Mean Business
We have made it our business to protect your business. Whether you need fleet, landlord, liability or commercial combined insurance, we can offer you high quality cover from some of the UK’s leading insurers, all at highly competitive premiums that’s backed by our outstanding cover-to-claim service.
Contact Us Today
For a friendly independent service and great value cover, contact Coversure Hull today. You can call us on Hull (01482) 434343, for free on 0800 977 6037 or you can email us by clicking here.
We look forward to helping you with your requirements.
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