With a tough market and new legislation on the horizon the motor fleet sector is facing a testing time But it could help itself by introducing better risk management measures says James O'Sullivan.

The UK fleet motor sector is facing a testing time. Increased competition has led to extreme pressure on rates at a time when incurred costs for insurers have risen steeply in recent years, despite fluctuations in claims frequencies.

And as if the economic pressures in themselves were not enough, the government is adding to the difficulties with a raft of legislative proposals which look set to increase the pressure on fleet companies and their insurers even further.

Most notably among these legislative proposals are the long-awaited new corporate manslaughter legislation, finally mentioned in the most recent Queen's Speech, and the forthcoming Road Safety Bill. Both will significantly increase the responsibility of fleet management companies when it comes to road safety.

Given the pressures that the sector is facing, it is hardly surprising that insurers themselves are keen to promote the benefits of adequate risk management. After all, with ever greater responsibilities being laid at the door of their policyholders it will be the underwriters who will face the prospect of a rising claims bill unless appropriate steps are taken.

And it is far from clear that even basic steps are being taken if some of the recent research is anything to go by. According to Norwich Union (NU), 85% of the UK's motor fleets are failing to carry out even basic risk management. Data gathered from 12,000 of NU's fleet policyholders over 18 months and unveiled last year revealed that only 15% are implementing 'fundamental' risk management. This includes such issues as licence checks, driver handbooks, investigating accidents and pre-employment checks of driver competency and experience.

Training programme

In addition, less than half of the 15% currently undertaking 'basic' risk management are using any form of ongoing driver training programme to help improve driver performance and minimise risk.

According to Roger Ball, commercial motor manager at Allianz Cornhill, there is no doubt that effective risk management is needed more than ever.

In his opinion the new manslaughter legislation currently being mooted should be the biggest spur to action. "Corporate killing is a huge issue," he says.

"If I were a manager and I asked my driver to drive an unreasonable amount of hours, then I would expect to be liable. The proposals will bring a higher degree of individual responsibility."

Given the importance of the issue, Ball hopes companies and fleet managers will get their act together in time. He says he has been "very active" in recent months keeping policyholders aware of the implication of legislation currently on the table, "producing documentation and trying to provide guidance as to how they can manage their risks more effectively".

As such, he says, the insurer doesn't offer a 'one size fits all' approach but instead looks at individual sectors and benchmarks frequency and cost of claims within a particular sector, providing comparative analysis to policyholders.

It's not only the insurers who perceive a shortfall when it comes to the industry's approach to risk management. Ian McKenzie, group business development director at fleet services specialist FMG Support, says his company has been working with leasing companies, insurers and brokers in an attempt to raise the profile of risk management, but that it has been a difficult pitch.

"One of the main issues is that fleet really isn't high enough up on the boardroom agenda, despite the fact that the legislation currently being proposed will really impact on people," he declares.

"There's been a high degree of apathy, but we're trying to put in some simple fleet initiatives, so that questions such as how often are driving licences checked and how often do people take an eye test are actually answered."

Not everyone is as convinced that companies really are being so lacklustre in their approach to the risk assessment of the fleets. "Over the past couple of years awareness of fleet risk management really has increased," says Shaun Perks, product manager at fleet management company Lloyds TSB autolease.

"A lot of people are talking about it, and people are getting more twitchy, as well they should, because the need to comply with legislation doesn't just apply to the Corporate Manslaughter Bill or the Road Traffic Bill, it's already there in existing legislation and requirements such as the Health & Safety Act, the Highway Code and the Working Time Directive."

And such sentiments are not just wishful thinking, it would seem. Such is the level of awareness among the sector that when industry magazine Fleet News conducted an extensive survey of fleet managers in April asking what the most pressing concerns were, the number one priority was a manager's duty of care.

Partly as a response to the newly-emergent anxieties among fleet managers, Lloyds TSB, in conjunction with several industry partners including Interactive Driving Systems, Intelligent Data Systems and Peak Performance, has launched Fleet Sense - a risk management service available for a small monthly charge costed per driver.

According to Shaun Perks, Fleet Sense avoids the up-front cost to policies which has put off companies in the past and offers organisational risk audit of: current 'driving at work' policies; driver risk assessment; online driver licence checking; online driver training; and recommendations for additional practical training for high risk drivers.

Clearly such a product would seem to meet the need for more effective risk management of fleets at a time when a third of all deaths on the road still involve a vehicle used for work purposes, according to Zurich Insurance.

Yet the extent to which fleet managers will really be willing to part with ready cash to improve safety remains debatable, especially with new laws yet to be implemented. Insurers must be hoping that we don't have to wait until the first prosecutions start for a more serious approach to risk management to really begin. IT

SMES WILL SUFFER WITH CORPORATE MANSLAUGHTER LAW

SME businesses could be in serious jeopardy if the government's new Corporate Manslaughter Bill is passed, says a survey by National Car Rental.

The findings revealed that 50% of the 400 firms surveyed do not have a travel policy. Over half rely on staff using their own vehicles for business travel, with 32% of companies providing 'cash for car' schemes.

Worryingly, 62% of employers that offer 'cash for car' schemes are not ensuring that regular maintenance checks are conducted on employees' vehicles.

Of these, 33% confirmed the company did not check insurance documentation and 21% didn't even check the employee's driving licence.

With more companies planning to introduce 'cash for cars' schemes in the next three years, this increases the risk to both employees and the businesses if clear travel policies are not established from the outset.

Neil McCrossan, national vice president of commercial development comments: "It is estimated that a third of all road accidents involve someone driving for work. Small businesses are perhaps the most vulnerable to the consequences of an accident involving a member of staff.

"This makes these findings very worrying, especially as nearly all the companies we spoke to were not even aware of the proposed Corporate Manslaughter Bill.

"If passed into law, senior staff members within a company could be held liable for an employee's death if it is proved that they have grossly failed to take reasonable care of that employee," he adds.

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