New rules governing the way insurers manage motor claims have the potential to reduce fleets insurance premiums significantly.

The rules, which were published last week and are expected to come into force in early April, are designed to cut the time and cost of road traffic accident injury claims valued between £1,000 and £10,000 – around 80% of all motor personal injury claims.

The new rules mean, where fault is not disputed, liability must be admitted within 15 days.
They should, in time, result in reduced motor insurance premiums, particularly for large fleets said Jonathan White head of corporate personal injury at Corclaim.

“A claim that proceeds to trial under the new rules will result in solicitors’ costs being capped at £2,350 and often much less,” he said.

“Under the current rules, claims that go to trial usually result in legal costs in excess of £4,000 and occasionally as high as £15,000. The potential savings for fleets and insurers are huge provided that the scheme is adhered to.”

This should go someway to offset the premium hikes predicted to be introduced this year, which follow an average 9% increase last year.

AXA predicts that motor insurance premiums will rise by between 7% and 11% this year.

But there is some uncertainty over whether fleets and insurers will be able to meet some of the deadlines in the new rules (see below).

In addition, the complexity of the rules and the tight timescales mean compliance could be difficult.

“The implementation of the IT required to support that new regime will inevitably cause chaos for insurers, fleets and claims managers until the scheme settles down.
Insurers and fleet will face huge challenges to comply with the new rules, which run to about 100 pages,” said White.

“This will inevitably lead to some interesting discussions between fleets, insurance brokers and insurers over the next 12 months.

“In addition to the minefield of compliance there are some practical problems,” he said. “Claims will be sent electronically to insurers – this could create issues where the claims handling agent and insurer are different.”

Fleet checklist

  • Are your accident notification processes sufficiently robust for your insurers to make a liability determination within 15 days?
  • Contact your claims handling or accident management provider to ensure their processes are ready for the new rules.
  • If your insurer fails to deal with your claims in accordance with the process resulting in higher insurance spend, how will this affect your premium. Why should you pay more when the increase is down to handling failures?
  • If you fail to deal with claims in time, how will your insurer react – increased premiums / penalty clauses?

The three new stages of a claim

  • Following an accident involving one of its drivers, a fleet will have to notify its insurer on the next working day.
  • Once a claim is sent to the insurer, it has just 15 days to respond. If liability is accepted, then the claim continues to the next stage. If liability is denied then the claim falls out of the new process.
  • The claimant sends supporting evidence, completes a settlement pack and suggests an offer for damages. The insurer has another 15 days to either accept or reject the offer, and/or make a counter-offer. A further 20 days for negotiations are allowed. If no is reached, the claimant’s representative prepares documentation for stage three.
  • After 10 business days from the date the claimant sent the stage-three documentation to the insurer, the claimant can ask the court to determine damages. The insurer can also elect to commence proceedings if the claimant fails to submit documents in time.