22 minute read
How to successfully reduce insurance costs
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HOW TO REDUCE INSURANCE COSTS
Jonathan Manning
As fleets search for savings in all areas of expenditure, insurance premiums are an obvious place to start.
The high fixed cost of fleet insurance will find itself in the crosshairs of businesses as companies emerge from the economic damage caused by COVID19. In broad terms, this leaves fleets with two options: either negotiate lower premiums on current policies; or accept more risk to cut premiums.
With premiums based on claims history, fleets should be in a stong negotiating position for 2021, given the lengthy accident-free period while
vehicles were in lockdown. However, these improved terms are likely to be short-lived. Insurance premiums have been rising since the Solvency II regulations came into force for insurance companies in 2016, and vehicle repairs have become more expensive due to the complexity of fixing Advanced Driver Assistance Systems.
Pressure on premiums
Insurers will also be under pressure to raise premiums in order to compensate for the loss of millions of new motor policies this year due to the collapse in new cars sales across Europe during the pandemic. And heavy losses on insurance lines (e.g. life) hit hard by COVID-19 will intensify pressure to raise prices on all policies, including motor.
“We were already in a climate of premium increases and we will get
a big increase on top of that,” said Eelco van de Wiel, managing director, fi insurance.
Even if fleets do succeed in negotiating cheaper premiums for 2021 as a result of lower claims this year, the savings will be shortlived unless they are accompanied by successful risk management strategies. If claims costs in 2021 return to 2019 levels, then premiums in 2022 could exceed pre-COVID-19 levels.
Self-insurance solutions
An alternative route to lower insurance costs, but with the potential for longterm savings, is to self-insure. The first and easiest step towards self-insurance is to increase the deductible
(excess) for own-damage claims. For larger fleets, recurring own damage repair costs are so predictable that this is more of a budget than a risk, said van de Wiel.
“We see fleets increasing deductibles from €500 to €5,000,” he said. “That reduces your premium a lot.”
four key areas to consider before self-insuring own-damage claims, starting with corporate attitude to risk. While self-insurance should prove cheaper over a long period, it is still vulnerable to spikes, which means it will not be cheaper every year than current premiums.
“It’s not a fit for companies looking for certainty,” said Mr van de Wiel.
Do your homework
Preparations for self-insurance also require detailed data collection from the past five years on every accident – its date, the amount paid, the sum reserved, the type of insurance cover – as well as accurate figures for the fleet size.
“You need to be tenacious and rigorous to get the source data, and not just what the leasing or insurance company reports. Then you can calculate claims cost for every car over last five years. It’s very predictable,” said Mr van de Wiel.
This same robust approach is necessary, he added, to ensure the design of the self-insurance strategy meets the individual needs of a fleet. Do not
accept an off-the-shelf solution from a leasing company or insurer.
“The question is whether the structure that you have, your claims history, risk profile, risk appetite and your objectives are best in class. Do the design of the programme independently and challenge your current suppliers,” said Mr van de Wiel.
Reduce risk
Finally, self-insured fleets need to tightly manage the claims and repair process – or outsource this to an accident management company. Only by minimising vehicle downtime and repair costs, and resolving claims as quickly as possible can fleets ensure that the savings from self-insurance are not outstripped by higher expenses elsewhere.
TRADITIONAL OWN DAMAGE INSURANCE VS SELF INSURANCE
Insurance premium tax
Insurance profit margin
Commission
Costs VAT (100% recovery)
Fleet profit
Stop loss premium + Insurance premium tax Service fees Costs
Cost savings with self-insurance
Losses Losses
Traditional Motor Own damage insurance Self-insurance
Source: Aon
Where do self-insurance savings come from? Self-insurance delivers savings in three primary areas: insurance premium tax (IPT), commission paid to brokers, and the profits of the underwriter.
IPT on motor insurance policies ranges from 42.9% in Denmark to 33% in France, 19% in Germany, 12% in the UK, 6% in Spain and 0% in some eastern European countries. Unlike VAT, IPT cannot be recovered.
As a rule of thumb, Motor Third Party Liability (MTPL) accounts for about 40% of a comprehensive insurance policy, and own damage, legal and roadside assistance represent about 60% of the policy. So fleets can save 60% of their IPT bills even if they continue with their current MTPL cover. Lower premiums also mean lower commissions paid to the broker or underwriter.
Self-insurance infrastructure But a successful self-insurance policy does depends on the maturity of a country’s motor insurance sector, including its repair management, claims management and accident management services, as well as advanced ‘eco’ platforms, said Eric Scrayen, owner of Solves BV.
“When an accident happens you have very different parties that need to be informed, and they need to take action,” he said. “You have the insurance company, the insurance broker, the fleet manager, the driver, the accident management company, the roadside assistance company, the courtesy car company, the repairer, the loss adjuster and so on. In the more mature markets they work on eco platforms where once the elements of the accident, car and driver are put into the system, everyone can see the information in real time and receive a push ‘notification’ when they need to act.”
Without these automated processes, the management of claims can be complicated and administratively burdensome.
Focus on risk reduction Arguably the greatest saving from self-insurance comes from the greater focus that fleets place on their own driver and vehicle safety when the company itself is responsible directly for the cost of any damage to its own vehicles.
SAFETY FIRST APPROACH SHAPES EUROPEAN AUTONOMOUS VEHICLE EVOLUTION
Mark Sutcliffe
In spite of all the hype about autonomous vehicles, the prospect of level 5 self-driving vehicles coming soon to a city near you remains some way off.
By 2030, it’s possible that we will see autonomous cars allowed to operate on some open roads, but for the time being, the evolution of Connected and Autonomous Vehicles (CAVs) in Europe is characterised by caution.
However, there are certain aspects of autonomy that are already being deployed on the roads of Europe – while others will become commonplace and even mandatory over the next couple of years.
Self-parking cars
Self-parking cars first appeared on European roads almost a decade ago, when Volkswagen Group unveiled new technology that could scan for a parking space before taking control of the steering wheel and manoeuvring the vehicle into the space.
Since then, many of the major OEMs have incorporated similar technology as an optional extra or – on more expensive models – as standard equipment.
Although they can take the stress out of parking in sought-after on-street locations and busy car parks, self-parking cars aren’t really an autonomous game-changer… yet.
Some experts believe the next level of self-parking cars – as Tesla’s Summon technology hints at – could be the key to reducing urban congestion. Some studies in the USA suggest that up to a third of vehicles cruising around the typical city are actually looking for a parking space. If the car could drop its occupants directly outside
©Waymo’s autonomous vehicle trials in the US are focusing on linking passengers with public transport hubs in Phoenix, Arizona.
their destination before heading off autonomously to find a parking slot, this could dramatically reduce urban congestion.
Tesla Summon only works over distances up to 70m and there are some well-publicised ongoing issues with the technology, but it signposts one of the most practical applications of low-speed autonomous vehicle technology that could prove useful in the medium to long term.
Driver assistance safety features
The EU has mandated a suite of driver assistance devices which employ partial autonomy to reduce accidents which will become compulsory on all new cars sold in Europe from 2022. The European Transport Safety Council (ETSC) spearheaded the campaign for the introduction of the following connected and autonomous driving aids, which received the green light from MEPs last year.
Intelligent Speed Assistance (ISA): in-car telemetry or geo-fencing to draw the driver’s attention to the legal speed limit.
Autonomous Emergency Braking
(AEB) radar and/or lidar sensors warn of an imminent collision and – if the driver doesn’t react – automatically applies the brakes.
a motorway lane and – in some cases – nudge the vehicle back into line without any input from the driver.
Attention Assist monitors the driver’s eye movement and if they show signs of fatigue or drowsiness, tells them to take a break before continuing.
These innovations are part of a wider road safety initiative which places connected and autonomous vehicle technology at the heart of a concerted effort to halve the 25,000 fatalities recorded every year on the roads of Europe.
Over the next five years, they are expected to play a significant role in shifting consumer perceptions to autonomous technologies and demonstrating the positive impacts partial autonomy can deliver.
Driverless shuttle buses
After some well-publicised fatalities involving CAVs in the USA, there has
been a subtle shift in the direction of autonomous innovation from private cars to public transport solutions.
For example, Google offshoot Waymo is working with Phoenix’s Valley Metro public transport system to ensure its autonomous shuttles provide firstand last-mile travel to Valley Metro customers.
A Waymo spokesperson said: “With the partnership with Valley Metro, we’re exploring mobility solutions that use self-driving technology to better connect travellers with the city’s existing buses and light rail. Working together, we’re exploring how self-driving vehicles can fill transportation and mobility gaps for riders across the Greater Phoenix area and help support the local infrastructure that already exists.”
In Europe, many of the current CAV trials on public roads involve driverless shuttle buses or ‘robo-cabs’ rather than private autonomous vehicles. Renault teamed up with global public transport provider Transdev and a number of technology partners to trial an on-demand shared mobility service in the Normandy city of Rouen
An autonomous Renault Zoe and driverless pod in the Paris-Saclay autonomous vehicle trials.
to evaluate autonomous vehicles on the open road.
Using four electric Renault Zoe cars and a Lohr i-Cristal autonomous shuttle bus, the Rouen Autonomous Vehicle Lab allowed subscribers to hail a vehicle via a smartphone app at one of 17 stops along a 10km route in Rouen’s Technopole du Madrillet business park.
The new phase of testing is taking place in the suburb of Saclay, southwest of the capital, where five AVs will supplement the existing Saclay Plateau transportation systems.
In the UK, the Government-supported Autodrive Project trialled a range of autonomous vehicles in Milton Keynes and Coventry over a three-year period.
The trial’s pavement-based Aurrigo self-driving pods are a new class of vehicle that blurs the lines between public and private transport providing last mile solutions for both passengers and parcels.
5G network More widespread availability of 5G will make it easier for connected cars to communicate with roadside
infrastructure for managing vehicle speeds on smart motorways and – in the longer term – vehicle to vehicle connections that could facilitate collision avoidance devices.
5G connectivity could also be used to bill motorists for using toll roads or levy variable congestion charges for entering cities.
Last summer August, the EU unveiled an action plan to manage the cross-border rollout of 5G so that its benefits are felt as widely and quickly as possible.
The EU supports three Public-Private Partnerships which will set up 5G trials across more than 1,000km of highway – including four cross-border corridors: Metz-Merzig-Luxembourg, Munich-Bologna via the Brenner Pass, and Porto-Vigo and Evora-Merida, between Spain and Portugal.
EV PACKAGE DEALS: FOR YOUR E-CONVENIENCE
@DieterQuartier
Most lessors are teaming up with local partners to best match the market’s requirements.
To optimise the use and convenience of an EV, a domestic smart wallbox and a payment solution for public charging can be included in the lease contract. To offer the best solution on every level, lessors are teaming up with e-mobility service providers.
Unlike a conventional car, an electric vehicle – whether it is a plug-in hybrid or a battery-electric one – comes
with an ecosystem around it. In other words, making e-mobility work for your employees largely comes down to providing the tools they need to charge their vehicle, either at home, at the office or at a public charger.
Rather than talking to charging infrastructure and e-mobility service providers directly, some corporates expect their leasing partners to provide an all-in solution. No wonder that lessors have been investing in this care-free solution, which usually involves a partnership with energy providers. For all parties involved, such solutions can be a stepping stone towards a widespread fleet electrification.
Arval, Engie & EDF: towards green energy and V2G
Arval and BNP Paribas have signed strategic partnership agreements
with companies like Engie and EDF, as well as developed fully integrated EV solutions including packaging of the recharging infrastructure, charging and billing services and reporting.
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“Bundling green energy in our EV packages is the next step, as well as starting to test and learn in the area of Vehicle to Grid solutions,” says Bart Beckers, Chief Commercial Officer at Arval. Even though it is still in its infancy, V2G is indeed an element to already consider right now as it can drive down TCO considerably as the EV “lends” its battery for grid balancing.
Alphabet: following the market closely
In addition to the suitable e-vehicle or plug-in hybrid, Alphabet’s range of services now also includes solutions for intelligent charging manage
ment. “It also covers the integration of renewable energies and measures to balance out peak loads and simple billing solutions in the company and at home,” explains Markus Deusing, Chief Commercial Officer, Chief Marketing Officer Alphabet International.
“Our offer is market-specific since the local requirements are very different. In our best practice markets (e.g. Netherlands and Germany), we have integrated high level services into our core offer: consulting & assessment, pre-defined installation cost, billing and payment of energy consumption, and charging hardware financing.”
Volkswagen Financial Services: all under one roof VW FS’s so-called MEB Consulting focuses on the whole electrifica
tion process of a vehicle fleet. “We go to the customer with our in-house experts, analyse the fleet situation, the existing usage profiles and possible infrastructure requirements. We then either pass on the findings to the VW Group brands or make our recommendations,” clarifies Jochen Schmitz, Head of International Fleet at Volkswagen Financial Services.
“When it comes to charge cards, we work closely with our subsidiary LogPay, which offers an integrated fuel and charging solution with the Charge&Fuel Card. In Germany, customers can access 98% of the charging points. The solution will be rolled out in European markets before the end of this year. In addition, customers have the option of obtaining a corresponding green electricity tariff and wall boxes via the Volkswagen subsidiary Elli.”
Business Lease: learning on the go
“We offer packages with charging systems and access to the charging network into the lease product. The request is still quite scattered, there is no one-size-fits-all solution on the market and every customer has a
different requirement,” explains Hans Kolff, Director International Sales at Business Lease.
“It is up to us to offer a one-stop shop solution that we can manage. Together with our partners we are offering such services and experiences from the past – Business Lease was the first in the Central European region to have Teslas in its fleet – do help us a lot. The more experience you get, the better you can adjust the product to the requirements of the customer and we have learned a lot as we moved forward.”
Leasys: “hybrid” offers
Leasys is getting ready for the electric revolution. “We are currently developing innovative rental offers that give our current and future clients the chance to get closer to the elec
tric world without fear or reservation,” says Federico Sanguinetti, CCO at FCA’s leasing and mobility solution provider.
“We have also created, through the “hybrid” offer, several products in our portfolio, in order to give the client the same benefits as usual plus more, all included in our offers. We are also about to launch a new product which will interact with the services linked to the charging, both private and public, of vehicles in collaboration with the main energy providers in Italy.”
Athlon: local partners, tailor-made solutions Athlon works with different partners that can give them and their custom
ers top-notch service locally. “We provide our customers with solutions to charge at home (including the reimbursement), at public charging stations and if needed at the office. Due to the different needs of our customers we might even have several partners to be able to offer the perfect tailor-made solution,” clarifies Marchel Koops, Chief Commercial Officer Athlon.
“One specific example is the charging cable versus the wall box. In some markets PHEVs are more popular than electric vehicles. Depending on the driving patterns, a charging cable with built-in tracking to provide the reimbursement process might make more sense than offering a wall box.”
ALD: partnership with E.On and ChargePoint
ALD has developed a comprehensive ALD Electric offer with a holistic approach to electric vehicles. It is composed of 5 key services which facilitate customer decision making and helps alleviate anxiety related
to EV adoption. These include consultancy services, test driving services, smart charging infrastructure, and reporting and payments.
“We have progressively partnered with charging infrastructure and support providers to jointly develop and market digital enhanced mobility, financing, and energy services to facilitate and accelerate the transition to e-mobility. These include recent partnerships this past year with international private energy company, E.On, and ChargePoint,” highlights John Saffrett, Deputy CEO, ALD.
The customer is always right. More and more fleet managers expect their leasing company to offer an integrated fleet electrification solution.
For the first time, Kia Motors is applying its low-emission plug-in power technology to the Ceed family. In all-electric mode, these vehicles have a range of around 60 kilometres.
Both new models feature their own distinctive design features to differentiate them from other petrol and diesel models in the Kia XCeed and Ceed Sportswagon line-ups. Each car has a new closed ‘tiger-nose’ grille at the front of the car to aid aerodynamic efficiency, and Sportswagon models feature distinct ‘eco plug-in’ exterior badges.
7 year warranty
The Kia XCeed and Ceed Sportswagon Plug-In Hybrid benefit from Kia’s unrivalled seven-year, 150,000-kilometre warranty as standard, extending to cover the new powertrain’s battery pack and motor.
The new Kia XCeed and Ceed Sportswagon Plug-In Hybrids offer a compelling alternative to conventional petrol and diesel models. The new powertrain combines an 8.9kWh lithium-polymer battery pack, an 44.5kW electric motor, and an efficient 1.6-litre ‘Kappa’ four-cylinder GDI (petrol direct injection) engine. The powertrain’s total power and torque output is 141ps and 265Nm, enabling the Ceed Sportswagon to accelerate from 0-to100 kph in 10.8 seconds, and the Kia XCeed in 11.0 seconds.
Kia is targeting an all-electric range of around 60 kilometres for both vehicles, enabling drivers to complete
the majority of daily drives and short commutes on electric power alone. Standard regenerative braking technology allows the new Plug-in Hybrid models to harvest kinetic energy and recharge their battery packs while coasting or braking, further enhancing the overall efficiency of the powertrain.
UVO Connect
Both cars offer Kia’s 8.0-inch touchscreen infotainment, or an optional 10.25-inch touchscreen infotainment and navigation system with Kia’s UVO Connect telematics. Unique to the new Plug-in Hybrid variants, the systems incorporate new functionality to help owners locate available charging points in their vicinity, or en-route to their navigation destination.
The screens can also show relevant information relating to the power train, displaying remaining charge levels in the battery and energy usage graphics. Furthermore, owners can use the touchscreen system to schedule when their vehicle should charge when plugged in at home, enabling owners to take advantage of cheaper off-peak energy tariffs. Both infotainment systems offer Apple CarPlay and Android Auto as standard, while the optional 10.25-inch touchscreen navigation system features Bluetooth multi-connection, enabling occupants to connect two mobile devices at once.
More info
SHARING: A NEW BUSINESS MODEL FOR LEASING PROVIDERS
Yves Helven
Leasing companies understand the shift from existing business models based on dedicating assets to a single user, to new services that are built around the sharing of assets – in our case cars or bicycles.
For a few years already, the leasing supply chain has started to add sharing services to their core value proposition, however without anticipating a massive shift from the traditional lease contract to on-demand models.
The origin of sharing
Economies based on sharing resources and assets are older than those dedicating assets to single users - business or consumer. The industrial revolution created a new type of consumerism that, especially in the West, has dominated all the way into the 21st century; it’s a linear economic model that can be described best as a linear “produce-use-dispose” economy.
The understanding that natural resources are limited has, starting in the last decades of the 20th century, facilitated a new business model based on recycling or re-using; this is the circular economic model, also described as “produce-use-reuse.”
Add technology plus the impact of Asian economies to the mix and we end up with digital, on-demand and shared services. Asia plays a much bigger role in this evolution than we might expect from a Euro-centric
point of view. On-demand and sharing have always played a major role in Asian economies; in addition, Asia has adopted the internet and connectivity first on mobile devices, skipping the stages of the personal computer. So, for the fastest growing economy, on-demand was the key from day one. The West has followed suit.
Corporate car and bikesharing
Corporations have started to offer shared solutions to their employees initially to cater for new generations or simply because shared cars and bikes added a layer of flexibility to the dedicated leased company car.
Recently however, the corporate client is looking at shared from a different angle. Fleet managers have done a great job, over the last decades, finding the best deals for OEMs, leasing, fuel, insurance… The reality however is that the total cost of ownership of a car fleet has been rising and the potential
for cost optimisations has dramatically decreased.
Furthermore, there is simply less need for professional miles. Salespeople, for example, do a big part of their jobs digitally, rather than by visiting clients. Major brands switch entirely to online business models and need less people on the road. As a result, the average business mileage is now much lower than it was in the 80s or 90s. Consequently, there’s less need for dedicated cars.
Shared is, in other words, a great savings tool and is justifiable by the shift from analogue to digital business models.
The supply chain
Who is supposed to offer shared solutions to corporate clients? Fleet managers have answered this question in the 2019 Global Fleet Manager Survey: the leasing company. The leasing industry however captures the opportunity but is reluctant to switch to business strategies that generate less money. As a reminder, leasing companies need scale to be profitable: revenue comes from volume, not only from the leasing contract itself. Most leasing companies offer shared solutions, but continue focusing on their core business, nonetheless.
New suppliers have seized the opportunity to offer either assets-to-share or software-to-share-asset solutions. These solutions have some success in some geographies; micro-mobility in particular has gained massive popularity with urban travellers. Carsharing works moderately well but cannot cope with the scale and service offering of short-term rental companies.
Even more importantly, the new supply
chain is consumer-oriented rather than focused on corporate clientele, which leaves the leasing companies with the opportunity to fill the gap.
Hopefully we will see an increase of the offering of shared services, because fleet managers see their leasing company as the number 1 partner in shared mobility.
WHAT’S ON OFFER TODAY?
The main leasing companies have developed sharing solutions that are gradually being enhanced and rolled out across Europe. An overview (in alphabetical order):`
ALD is growing its MaaS offering by consolidating existing solutions and adding technology platforms on top of these. ALD Move, a MaaS app, was launched in the Netherlands recently, partnerships with companies such as MaaS Global are in place and ALD Carsharing is already live in 6 countries.
Alphabet joins the mobility market through its AlphaFlex offering (a mobility budget solution) and the AlphaCity car and bike sharing platform. Alphabet has extended its client base for mobility solutions to customers outside of the traditional corporate world: hotels, business parks and residential areas can join the platform.
Athlon offers mobility services in a monthly-fee model via its ChangeMyCar and Athlon Flex products. In addition, Athlon Share is a corporate pool-car sharing solution for employees without a dedicated company car. Bike and scooters are offered as part of Athlon’s leasing offering.
Arval joined the MaaS Alliance in 2019 and believes firmly in the future of mobility as an offering. Out of the participants to their Mobility Observatory Fleet Barometer, a corporate survey, 23% had already used carsharing solutions. Arval proposes a carsharing solution to its clients via web and mobile; it allows the user to book, open and close vehicles.
LeasePlan’s NextGen digital platform will be hosting a multitude of mobility solutions. At the same time, collab orations with major mobility suppliers are already in place and specific software is being developed to offer corporate clients the possibility to share vehicles within their fleets.
Leasys recognises that we are in the subscription economy era and aims to provide mobility “from one hour to a lifetime.” Several programmes, such as Jeep Miles (the client pays per kilometre), BeFree (flexible lease solution) and CarCloud (mobility subscription) will transition the company to a mobility provider. Leasys has also launched U Go, a peer-to-peer carsharing programme, and I-Share / I-Link, software platforms to enable carsharing.
Niro has never been so trendy.
available as
electric hybrid plug-in hybrid
Introducing the new Kia Niro family. Available as electric, hybrid and plug-in hybrid.
It’s time to update the way you drive. The new Kia Niro family has a redesigned new look and comes with three engine options: full electric, hybrid and plug-in hybrid. But that’s not all. Add to that an extra-spacious interior and a 7-year warranty, and you’ll find plenty of reasons to say that there’s nothing like a Niro.
