LARGE fleets will have to consider seriously self-insurance in the next couple of years as insurers deliberately avoid the risk, a major claims management specialist has warned.

Fleet sector premiums rose by 25 per cent in 2000, but some insurers still took on fleets for a premium below the total cost of claims of the previous year, according to Theodore Agnew, executive chairman of Town & Country Assistance.

Agnew believes this situation cannot continue, and that certain fleets will effectively become uninsurable, and forced to carry their own risk: 'Fleets are going to have to take more risk in-house. There will be a huge move to self insurance, not on strategic grounds but because fleets cannot get cover.'

Self-insurance can take many forms, from organisations deciding to pay for all repairs to their own vehicles, to accepting inflated excesses per incident (perhaps to as much as £10,000), buying a cap on single incident claims (perhaps at £50,000), or buying cover for total aggregate annual claims costs beyond a certain threshold.

Much of the reluctance to adopt self-insurance techniques lies not in the cost basis, but in the administration involved in settling claims professionally, a situation that should not deter fleets, according to Agnew: 'Fleets need to divorce financial administration from the management of claims. Outsourcers have a role to play in the process, so the fleet takes on the risk while the risk management company provides the service to the driver and manages the claims procedure.'