If you’re a fleet operator, you know how important it is to have adequate insurance coverage for your vehicles and drivers. However, you also know how expensive it can be for comprehensive fleet insurance and would be experiencing an increase in claims cost per accident.
Would you like to save money and have more control over your claims?
Have you considered self-insurance motor fleet?
What is self-insurance motor fleet?
Self-insurance motor fleet is a form of risk management that involves setting aside a fund in your business to pay for the claims that arise from your fleet operations. Instead of transferring all the risk to an insurer via your premium, you retain some of the risk yourself and only insure for any losses that you may cause to third parties – such as other vehicles, property or people.
How does self-insurance motor fleet work?
Setting up a self-insurance motor fleet programme means taking out a third-party insurance policy that covers the liability for any damage or injury you cause to others. This policy will have a high deductible, meaning you will have to pay a large amount of money before the insurer pays anything. This deductible is the amount of risk you are willing to bear by yourself.
You also need to set up a fund in your business that will cover the cost of the deductible and any other claims not covered by the third-party policy, such as the damage to your own vehicles. This fund can be managed by you or by a third-party administrator, such as an insurance broker or a claims management company. You can also use a state-of-the-art claims management platform that will help you monitor and reduce your claims costs.
What are the benefits of self-insurance motor fleet?
Self-insurance motor fleet can offer several benefits for fleet operators, such as:
- Lower premiums
By taking on some of the risk yourself, you can reduce the amount of premium you pay to the insurer. This can result in significant savings, especially if you have a large fleet with a high volume of claims.
- More control
By managing your own claims fund, you can have more control over how the claims are handled and settled. You can also implement your own risk management strategies, such as driver training, vehicle maintenance and safety policies, to prevent or reduce the frequency and severity of claims.
- Cash flow
By paying for the claims as they occur, instead of paying a fixed premium upfront, you can improve your cash flow and use the money for other purposes, such as investing in your business or expanding your fleet.
- Tax benefits
Depending on the tax laws in your country, you may be able to deduct the amount of money that you set aside for your claims fund from your taxable income, which can lower your tax liability.
What are the challenges of self-insurance motor fleet?
Self-insurance motor fleet is not without its challenges, such as:
- Risk exposure
By retaining some of the risk yourself, you expose yourself to the possibility of having to pay a large amount of money in the event of a catastrophic claim, such as a multi-vehicle collision or a serious injury. You need to make sure you have enough money in your fund to cover the worst-case scenario, or have a backup plan, such as a reinsurance policy, that will cover the excess losses.
- Regulatory compliance
Depending on the regulations in your country, you may need to meet certain requirements to qualify for self-insurance motor fleet, such as having a minimum number of vehicles, a minimum amount of capital or a minimum level of financial security. You may also need to report your claims data and performance to the relevant authorities on a regular basis.
- Administrative burden
By managing your own claims fund, you will have to deal with the administrative tasks involved in processing and paying the claims, such as collecting the evidence, negotiating with the parties and keeping the records. This can be time-consuming and costly, especially if you do not have the expertise or the resources to do it efficiently. You may need to outsource some of these tasks to a third-party provider, which will incur additional fees.
Is self-insurance motor fleet right for you?
Self-insurance motor fleet is not a one-size-fits-all solution. It is a complex and strategic decision that requires careful analysis and planning. You need to weigh the pros and cons of self-insurance motor fleet and compare it with other options, such as traditional insurance or captive insurance. You also need to consult your accountant, your lawyer and your insurance broker to make sure you comply with the legal and financial requirements in order to set up the best possible coverage for your fleet.
If you are interested in learning more about self-insurance motor fleet and how it can benefit your business, you can contact us at Self Insurance Protect.
We are a leading provider of self-insurance solutions for small, medium and large fleets. We can help you design and implement a self-insurance motor fleet programme that suits your needs and budget. Self-Insurance Protect can also provide you with a range of services, such as consulting and advice, analytics & integration, implementation, servicing and cost planning, claims and accident management, and more. Our team has the experience and the expertise to help you reduce your total cost of risk and improve your fleet performance.
Other blogs that may be of interest:
1,000 vehicle self-insurance motor fleet solution provided
Motor Trade Underinsurance – Make sure you have the right cover TODAY!
Any questions? Please don’t hesitate to contact one of our team.
Matthew.collins@ascendbroking.co.uk | Telephone: 01245 449 060
