Vans have long been in the shadow of cars when it comes to cover and products. Peter Allott explains how Norwich Union is changing the situation

With many of the van market's core customers in the building and manufacturing sectors, has the present liability crisis impacted on business? If so, what can be done to ease the problems?

The procedures followed by van users in their day-to-day business have a significant impact on their ability to secure liability cover at a competitive premium. Van users can take action by recognising their responsibility to minimise risk and to demonstrate a positive attitude to risk management. But most van users are not experts and they often need help and advice from specialists to identify the areas where they can take action.

There seems to be some discrepancies over the ABI group rating. What are the challenges brokers face? And should the rating system be changed or modified?

The introduction of ABI grouping for vans in 2000 was a welcome initiative. All vans are reviewed against a number of fixed criteria to determine which of 20 groups they will be placed in. The process is similar to car, but with one major difference. While cars are allocated to groups using a combination of fixed criteria and a panel of industry representatives, vans are allocated using only fixed criteria. Van grouping is relatively new and I would welcome its continued development. It is envisaged that this may include taking a similar approach to that used for cars.

One impact on brokers following the introduction of ABI group rating is the need to capture more information on the customer's van. Brokers are now typically required to capture the make, model and derivative of the van to calculate a premium. Whereas car users may know this information, van users often don't and have to go back to their log books. Getting the right derivative is important as it can have a significant impact on premiums.

Norwich Union (NU) recognised this issue and, to help brokers, the new Your Van rating guide includes a list of all vans in the ABI list.

Security has been an issue in van insurance. What has NU done to help its customers?

All van users and insurers have been aware that security on vans has been a major issue. Vehicles have been very easy to break into and van users have had to resort to putting padlocks on their vans to give some form of security. However, van manufacturers are starting to take action and newer models are now being factory-fitted with security devices, including immobilisers and improved locks. This is good news for insurers, but more so for customers, who have been in the shadow of initiatives on cars for too long.

NU has long supported customers who take action to manage the security of their vehicle. This stance is continued in the new Your Van product. Van users whose vehicles have a Thatcham Category 1 or 2 device, or approved tracking device, whether factory-fitted or after-market, can benefit from a discount of up to 10%. In addition, Your Van customers have access to a dedicated security helpline where they can get advice on vehicle security devices and wider security issues.

Are brokers using EDI full cycle to its full potential? Should point of sale be the way forward?

EDI full cycle has allowed brokers to realise the benefit of handling all customer business at the point of sale. But the focus has been on private cars for too long and other classes of business that could benefit from the advantages of full cycle have been ignored.

NU has recognised this issue and its recently launched Your Van product is leading the way by offering brokers the facility to place van business through EDI full cycle.

Brokers clearly see the benefits that EDI full cycle gives in terms of speed and customer service. Insurers also benefit from empowering brokers and allowing them to get on with their business. This mutual benefit is recognised by NU as all Your Van business through EDI full cycle benefits from a 5% premium discount.

EDI full cycle provides brokers with an alternative to complement the more traditional channel of placing business through regional offices. The demand from brokers is strong and development by insurers needs to reflect this pull.

With vans getting bigger, what are the different areas of risk that brokers and insurers should now be aware of? Should the present underwriting regime change?

Vans used to come in three sizes, Fiesta, Escort and Transit. Now the market has evolved to offer customers a myriad of sizes and shapes of vehicles.

These changes bring with them a number of issues that brokers and insurers need to be aware of. Generally, vehicles have become bigger, quicker and have a higher specification. Load areas have a larger cube and can carry more goods. Vehicles' on-road performance has improved with better diesel engines, and they now come equipped with stereos, CD players and satellite navigation devices. These improvements all have the potential to impact on claims costs.

However, improvements in security and reparability have countered many of these changes and mean that the current underwriting stance need not be changed.

  • Peter Allott is market development manager, motor, at Norwich Union