What are the prevailing market factors and what can fleet managers do to manage their risks and costs?
Fleet Risk Management

Factors influencing capacity in the UK fleet insurance market

As well as COVID-19, there are a range of factors impacting fleet insurers and their appetite for risk in the market.

One of the biggest changes was the Ogden adjustment to the discount rate on 5 August 2019, the impact of which started to be felt in the market prior to the COVID-19 breakout. The Ogden adjustment increased the reserving requirements for long-term personal injury claims to reflect modern rehabilitation and care costs. Insurers had to add this element of inflation but it also had a knock on effect on reinsurance costs.

Outside of this, capacity has reduced over the last three years for distressed risks and hazardous trades in particular, or for those fleets viewed as poorly run, with motor insurers all looking for rate increases on their renewal portfolios. This is because insurer profits are being hit by increased re-insurance costs, which predicted to continue into 20211 and vehicle repair costs have escalated by over 33% over the last five years2, as technology historically only seen in high value vehicles becomes standard, and the recent increase in levies payable to the Motor Insurers Bureau, following the decision to pool terrorism costs. Fleet risks have also been heavily impacted by vehicle theft, which is up 50% over the last five years3.

We are also seeing a sector split. There have been new entrants and a number of online trading platforms have launched targeting the smaller end of the fleet market, and those clients that are an attractive risk. As with any online platform this commoditises the market and drives down rates for these clients. However we are not seeing this for the medium to higher risk fleets that, as a consequence, may not be able to access attractive rates as they have previously, as insurers are unable to balance their portfolios as effectively as before.

There have also been other developments including:

  • Clients that use telemetry and other risk management technology continue to be attractive risks and with further solutions coming onto the market this is likely to continue. A number of insurers are willing to invest financially in risk management solutions for fleet clients.
  • Long-term agreement offerings are still available in the market but the wordings are less favourable than they were pre-Ogden review.
  • A two tier pricing approach in the market with insurers reducing rates on new business and increasing rates at renewal.
  • An increase in alternative structure options. For example, clients can choose to self-insure some elements, such as accidental damage, or take a cross class deductible on their motor liability and public liability.

A combination of all these factors, means that fleet insurance premium costs have grown significantly in the past two years with increases we are seeing typically ranging from 25% to 35%, with higher risk clients feeling the pain most.


The impact of COVID-19 is starting to be felt on the market and insurers made various comments. One prevailing theme is that with less cars on the road, there are less accidents, with one estimate stating that claims are down up to 50%4 during March and April 2020 compared to the same period last year, so over the short-term this is likely to have an impact on claim frequency.

However equally it has been harder to get parts across the board and we have seen that this is driving up hire costs as vehicles are taking longer to be repaired.

Insurers rely heavily on investing their cash flow in the equity market to provide a return on their premium pools, however COVID-19 has had a major impact on returns and impacted insurers’ profitability; making premium increases likely post COVID-19.

Fleet renewals during March through to May 2020 have been impacted by a lack of appetite for new business as insurers’ reduce their capacity during the lockdown. Overall it is clear that the hardening of the motor fleet market is set to continue post lockdown. So how should fleet managers prepare?

Advice for fleet managers

With different factors influencing the market there are a number of steps fleet managers can take to help manage their costs and improve their risk management including:

  • With insurers often asking for additional information when considering new risks clients need to build in additional time for renewals.
  • Providing analysis of claims trends will help insurers with pricing.
  • If there have been any large claims, provide detail on improvements that have been implemented.
  • Invest in targeted risk prevention training especially improving driver behaviour.
  • Detail any business improvement initiatives you have invested in and the cost benefit.
  • Agree claims protocols.
  • Explain future plans – growth or reduction - as both can influence pricing.
  • Work with a broker to help manage your risk profile and drive improvements which can reduce costs.

Fleet risk management is won or lost on access to quality claims and risk management data. Gallagher uses advanced fleet claim modelling analytics to pinpoint the risk issues for your fleet. We analyse thousands of claims data metrics with our in-house fleet risk managers, brokers and claims team to bring insightful feedback for your team and to maximise this difficult area of insurance.

We look at claims data over a three to five year period to pinpoint the stress points for your fleet. We can then help develop a risk management programme and present the fleet to the market.

In the current market, Gallagher motor fleet analytics can be a critical differential for businesses.

1. https://www.reinsurancene.ws/reinsurance-rate-increases-to-continue-through-2021-kbw/
2. https://www.insurancetimes.co.uk/news/repair-costs-rise-by-a-third--and-are-going-to-keep-rising/1429343.article
3. https://www.fleetnews.co.uk/news/fleet-industry-news/2019/01/25/vehicle-thefts-increase-by-almost-50-in-five-years
4. https://www.postonline.co.uk/claims/7518611/analysis-motor-insurers-report-up-to-50-reduction-in-claims-due-to-coronavirus-lockdown