John Kavanagh
Managing Director, Marsh Commercial
Managing a fleet of vehicles is a challenging job. Fleet operating costs in the UK remain high, with fuel, workforce, maintenance and repair costs all volatile in recent times. The motor fleet insurance market presents unique challenges. But the right cover can play a central role in your fleet management company. While motor fleet insurance premiums on average are also steadily increasing, there are strategies fleet managers can take to mitigate against and beat this trend and lower their premium costs.
Therefore, it is crucial to remain informed and proactive in identifying strategies and focal areas that directly influence insurance-related costs, as well as understanding how these costs can be effectively managed and reduced.
Understand the current motor insurance landscape
Cost reduction is crucial for the success of any fleet operation. While the overall insurance rates in the UK have seen a reduction of 6%, motor fleet insurance has largely defied this trend. In fact, during the first quarter of 2025, motor insurance premiums increased by 8%.1
This can be attributed to several key aspects, including:
- Labour shortages: A lack of skilled technicians has caused an increase in labour costs and lag time for repairs.
- Vehicle technology: Modern commercial vehicles and specialist vehicles, particularly electric vehicles, often require specialised knowledge and parts. This drives up repair expenses.
- Supply chain issues: Delays in getting parts can lead to extended vehicle downtime. This can impact your operating costs and fleet efficiency.
- Third-party costs: Taking all of the above into consideration, leading to vehicles off the road and exposure to third-party credit hire costs.
How underwriters calculate motor fleet premiums
Understanding how insurers calculate premiums is essential for effective fleet management, and to manage your budgetary expectations around your renewal time. Typically, insurers calculate premiums using various factors, such as:
In recent years, insurers have changed the way they calculate premiums. Increased cost of repairs and supply chain issues means that insurers now consider the cost of claims inflation.
Underwriters will calculate your premium rate per single vehicle. They discount it based on these considerations:
- Claims history and performance: One of the leading factors is the number of claims made. Reducing the claims cost per vehicle (CCPV) is a strong indicator of fleet performance and can result in premium reductions. It also improves claims management.
- Vehicle location: Insurers will consider not only where the business is based but increasingly where your business vehicles spend the majority of their time. Urban areas and major cities are typically rated higher than more rural areas.
- Driver profiles: The age, experience, tenure and driving history of your drivers are critical considerations. As is your relationship with these drivers, whether they are direct employees, self-employed, or agency drivers.
- Type of vehicle and usage: The make, model, and purpose of your business vehicles play a role in determining risk.
- Risk management practices: Demonstrating effective risk management can lead to more favourable rates.
- Use of safety technology: Vehicles cameras, telematics and other vehicle features that can influence driver safety and improve defensibility in the event of a claim.
Staying ahead in the motor fleet insurance market
Despite the average rate increase in the motor fleet insurance market, there are still opportunities for a well-managed fleet of vehicles to secure competitive premiums and beat the market average. Here are some strategies to consider:
- Prompt notification of claims: Timely reporting of incidents is crucial and can significantly reduce claims costs. A consistent lag in reporting can lead insurers to perceive a higher risk of inflated costs. Ensure your team understands the importance of immediate claims notification directly to your insurer.
- Fleet management software: Many underwriters now want access to driver performance data. By partnering with fleet management system providers like Samsara, you'll gain insights into driving behaviours. This can lead to discounts on your premium. This real time data not only helps in assessing risk but also in implementing improvements to reduce incidents, while also crucially providing robust support for defending and settling third-party claims.
- Claims cause/cost analysis: Ask your broker for an analytical claims report. Or, ask whether they’re able to provide access to digital analytics solutions. You can use tools like Marsh’s Blue[i], for real time insights into your claims history and fleet efficiency. Take the time to understand it. This should help identify both the frequent and costly claims. You’ll then be able to easily spot areas for improvement.
- Driver management and training: Insurers typically favour drivers aged between 23 and 70. They should have at least two years of experience. This is particularly important for heavy goods vehicles. You can also improve your risk profile by minimising the use of agency or short-term drivers. But where necessary, you need to demonstrate how this risk is mitigated. Invest in driver training programs to reduce the risk of accidents and claims. Provide regular refresher courses. This helps reinforce good driving habits and driver safety. Training should include defensive driving techniques, road safety reminders and traffic rules.
- Regular vehicle maintenance: Implement a regular maintenance schedule. Include inspections, oil changes, tire rotations, and brake checks. This will help to monitor each vehicle condition and reduce costs, breakdowns and accidents caused by mechanical failures.
- Safety audits: Conduct regular fleet safety audits to identify potential hazards. Review incident reports and address any gaps in training or policies. This helps to continuously improve safety measures to minimise accidents.
- Highlighting risk management efforts: Fleet owners should invest in their fleet risk management. Demonstrating your commitment to vehicle safety and risk reduction is vital. Striving for optimal performance can only have a positive impact on your premium. It's therefore really important to make underwriters aware of these advancements. Especially when they show their impact on fleet programme performance. At Marsh Commercial, we offer a fleet risk management service. This includes membership to our Fleet Safety Academy. This provides the perfect extension to your team. We can help improve accident management and enhance your claims defensibility.
Take action with our fleet management solutions today
Navigating the motor fleet insurance market doesn’t have to be daunting. Our experts can help you understand every detail of your insurance needs. We can also identify opportunities to save you money. By leveraging our insights and resources, you can position your fleet for success in a challenging market.
Don’t let rising premiums catch you off guard. Contact our commercial fleet insurance team today for support in optimising your fleet insurance strategy. Together, we can ensure that you stay on the right side of the market and achieve the best value for your fleet.
Sources
