Insurance – it’s a subject that company drivers may take for granted, but one which is guaranteed to be high up on a fleet manager’s agenda.

The UK fleet insurance industry is worth an estimated £1.65 billion per annum, according to research conducted by EMB, a non-life actuarial consultancy.

EMB reports that changes to the way the industry operates is putting additional pressure on fleet operators.

The current challenge facing organisations is in relation to funding major increases in premiums after a number of years of market stability, according to Paul Moorshead, a senior consultant with EMB.

“The upward pressures on pricing are currently very strong, given that many motor insurers are advising that the year will end with significant underwriting losses,” he says.

Research suggests that for every £100 of premium that motor insurers collect, £111 is paid out by way of claims and expenses.

As a result, experts are predicting a minimum 10% uplift in premiums over the next year with suggestions, in some quarters, that this will be repeated for at least the next two or three years.

In addition, many insurers are turning away business because of its unprofitable nature linked to a marked increase in personal injury litigation.

And, as 85% of company fleets are insured with four of the 15 operators in the fleet motor market, good deals are becoming increasingly hard to come by.

Ian Leonard, of plant hire company Speedy Hire, is one fleet director having to deal with the effects of insurance premium increases.

With a fleet of some 3,000 vehicles, he is expecting a tough conversation with his company’s insurers at renewal stage next year.

“Last time we agreed a two-year fixed price deal which, in hindsight, was the best thing to have done,” he says.

“But given the current state of the market, I am in no doubt we will be paying much higher premiums for the year ahead.”

A company’s claims history defines how premiums are charged and in an attempt to minimise increases, as well as mitigate the risks posed in running a fleet, a growing number of insurers are establishing closer working relationships with customers.

Steve Shirley, Norwich Union’s motor risk manager, says: “The culture within some companies influences attitude to risk, but by working long-term with policyholders, activities that will help reduce exposure to risk can be put in place.”

Implementing strategies such as improved driver education programmes, verifying vehicle user credentials and implementing effective security measures all contribute to cutting premiums.

There are other measures that can be taken, too.

For instance, Mr Leonard has negotiated high excesses as part of the comprehensive cover he has in place for his company’s vehicles.

The way insurance companies operate can make a difference to the way organisations manage insurance obligations.

One common thread is the legal requirement for all fleet vehicles to be registered on the Motor Insurance Database, as well as insurers requiring details of which vehicles make up a fleet.

This information can normally be supplied in two formats: specified policies (involving periodic identification of vehicles by registration which tends to favour smaller fleets) and unspecified policies (issued on a blanket basis and covering all vehicles, which larger fleets can utilise).

As Ron Munro, underwriting development manager with fleet insurance provider Fortis, says: “The work involved in administering the insurance requirements for a fleet can be onerous, but not enough organisations look closely enough at the ways this can be done, such as assessing what the best type of policy is and how it operates.”

The claims process should also come under scrutiny on a regular basis to ensure best practice methods are used.

Many fleets have a streamlined procedure in place, whereby drivers call a dedicated number to report accidents with all associated paperwork and the actual vehicle repair being taken care of, minimising involvement of the driver and employer.

Having these procedures helps reduce overheads and speeds up response times for those in the fleet vehicle supply chain.

As Richard Harper, director of Lex Claims Solutions, comments: “Companies normally remain loyal to providers of fleet vehicle services so it is vital that such relationships be managed on a continuous, proactive basis.”