Rising fleet insurance premiums have become a pressing concern for businesses across industries, driven by a complex interplay of global factors. The UK Government figures suggest a 21% price rise in premiums over the past two years. Parts shortages, delayed shipments and increased material costs have led to longer repair times and higher expenses. Additional factors driving up costs include inflation, rising car thefts and potholes.
As a result, fleet managers find themselves at a crossroads, grappling with the need to maintain operational efficiency while facing escalating insurance costs that directly impact their bottom lines. This situation calls for innovative strategies and a deeper understanding of the market forces to navigate these challenging times effectively.
Why vehicle repair costs are rising
Supply chain disruptions
The COVID-19 pandemic and the war in Ukraine have significantly disrupted global supply chains, leading to shortages of vehicle parts. The shortage of semiconductors, in particular, forced many manufacturers to halt production lines. Research conducted by Epyx suggests that fleets have seen a 13% additional rise in the cost of vehicle parts on top of the already high 22% of UK inflation since 2020. This means fleets have had to deal with a 45% cost rise to maintain their fleets in only four years. This combination of increased demand, manufacturing delays and scarcity of materials has resulted in significant price hikes across the automotive industry, affecting both new vehicles and replacement parts.
Complexity of modern vehicles
Modern vehicles have evolved into intricate machines. This complexity of advanced technology and sophisticated sensor systems, to enhance safety, has significantly impacted the automotive repair landscape. Technicians now require specialised knowledge and tools to diagnose and fix issues, as components are increasingly interconnected and digitally controlled. Integrating complex electronics and high-tech materials has elevated the skill level needed for repairs, consequently driving up labour costs.
The impact on fleet insurance premiums
More expensive claims
The advent of high-tech vehicles has significantly impacted repair costs and fleet insurance premiums. UK data reveals a striking 35% increase in parts prices since 2020, with headlamp bulbs surging by 45%, clutches by 40% and other components rising by over a third. These escalating expenses have forced insurance providers to adjust their rates, resulting in higher fleet insurance premiums for operators. Consequently, fleet managers grapple with rising operational costs while ensuring their vehicles are insured and road-worthy.
Tackling rising premiums due to repair costs
Cost pressures on fleet insurance premiums are also rising continually. Therefore, the UK Government has established a Motor Insurance Taskforce, led by the Transport Secretary. This expert group, including industry representatives and consumer advocates, aims to investigate the causes of rising car insurance costs, evaluate consumer value and assess the impact on the most affected groups. The task force will utilise insights from key regulators like the FCA and CMA.
Mitigating fleet insurance costs with proactive fleet management
Preventative maintenance
Fleet managers can encourage proactive preventative maintenance by implementing a structured program that includes:
- Perform regular oil changes and fluid checks
- Monitor tyre pressure and tread depth
- Conduct brake inspections
- Adhere to scheduled maintenance based on mileage or time intervals
These actions prevent breakdowns, reduce costly repairs and improve vehicle longevity. Additionally, they can lower insurance premiums by demonstrating a commitment to safety and risk management. According to FleetCover, insurers consider proactive risk management procedures when calculating premiums. Consistent maintenance also contributes to higher driver retention rates, which insurers view favourably.
The role of telematics
Fleet managers can leverage telematics systems like Webfleet to monitor vehicle performance, identify maintenance issues early and improve driver behaviour. By addressing issues before they escalate, fleets can reduce repair frequency and costs. Improved driver behaviour, for example, contributes to fewer accidents and less wear and tear on the vehicle. Ultimately, reducing the frequency of unexpected maintenance needs. These efficiencies can be highlighted in negotiations with insurance providers to lower premiums*, as reduced risk and maintenance costs make fleets more attractive to insurers.
Are you looking for reduced insurance premiums? Take a proactive approach with our real-time vehicle diagnostics, predictive maintenance and fleet maintenance schedules. Discover how telematics can revolutionise vehicle maintenance and help you manage fleet insurance costs effectively. Contact Webfleet today to learn about our comprehensive fleet maintenance solutions.
*Subject to the insurer’s discretion.
