New research by Finaccord, a specialist market research consulting firm, estimates that the market for motor insurance for fleet vehicles across ten European countries is worth €15.8 billion [$21.77 billion] in premiums for 2011, plus another €980 million [$1.35 billion] in premiums and other revenues for road assistance for fleet vehicles.
The report forecasts that while this market grew very little between 2007 and 2011, it will increase to more than €18 billion [$24.8 billion] by 2015, for motor insurance and assistance combined, as prices rise to combat underwriting losses in major countries such as Germany and the UK.
“This substantial but complex market carries many opportunities, whether by country , by type of company or by industry sector,” the report says.
This study looked at Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Sweden, Switzerland and the UK and at fleet manager, broker, underwriter and service provider sectors.
Finaccord broke down the fleet vehicle market between passenger cars and commercial vehicles, and then again between different types of specialist road transport segments. For passenger cars, these were hire firms, driving schools, the motor trade, operating lease firms, taxis, and other fleets.
Among fleet passenger cars, the segment of car hire companies is expected to have the best growth in premiums between 2011 and 2015, according to David Parry, managing consultant at Finaccord. “This is because the number of cars for rental is expected to rise significantly, and because policy prices are high for these vehicles,” he said. “A lot of car hire companies have captive insurance operations because it is difficult to insure them, but the size of this segment and its prospects for growth mean that there is a substantial opportunity here.”
Finaccord divided fleet commercial vehicles between couriers and postal services, the motor trade, operating lease firms, own account haulage vehicles, removal firms, road haulage firms, van and lorry hire firms, and other fleets.
Among commercial vehicles, road haulage is the largest specialist segment in terms of premiums paid, but it is a mature market, Parry said. Operational leasing is becoming more popular in many European countries, and these fleets are expanding faster than average. “This means that insurance and assistance providers stand to gain more by targeting a relatively small number of leasing companies rather than a mass of small and medium-sized fleets,” Parry said.
The study also found that 15.9 million passenger cars could be classified as fleet vehicles across these 10 countries for 2011 (defining a fleet as three or more cars insured together by private or public sector organizations, excluding personal customers). The largest number of fleet cars was found in Germany, at 3.70 million, followed by France with 2.79 million fleet cars; Italy and the UK were neck-and-neck behind these two with 2.39 million and 2.38 million fleet cars respectively.
Finaccord also analyzed this market in terms of insurance premiums, estimating that car hire [rental] firms paid an € 671 million [$925 million] in motor insurance premiums in 2011, while operating lease firms paid €1.258 billion [$1.734 billion]; these were the largest of the specialist segments analyzed; the majority of fleet cars are insured by a wide variety of organizations, with the whole fleet passenger car sector amounting to €8.49 billion [$11.7 billion] of motor insurance premiums.
Finaccord’s estimates for commercial vehicles concluded that there were 8.38 million fleet commercial vehicles across the 10 countries in 2011, plus another 593,000 fleet buses and coaches. France has the largest number of fleet commercial vehicles, at 1.87 million, ahead of Germany and the UK (1.73 million and 1.45 million respectively). For this sector, Italy is a distant fourth, with 774,000 fleet commercial vehicles, because its economy is dominated by small and micro-businesses, the report said.
Finaccord calculated that €6.58 billion [$9.06 billion] of motor insurance premiums were paid for these commercial vehicles in 2011, with road haulage companies paying €1.323 billion [$1.823 billion of this figure and operating lease firms paying €543 million [$748 million].
“The challenge in the fleet insurance market is to understand the risks involved in detail and to reduce costs, and there are many different ways to do this. Large fleets can be rated on their own claims record, and improving driver behavior is key for them, said Parry. “For smaller fleets, affinity schemes with trade associations can play a similar role, by underwriting a large number of vehicles with a similar risk.”
He also said there is “huge potential value” in the use of telematics for both large and small fleets.
“At present it [telematics] helps insurers mostly with assistance and with recovering stolen vehicles, and it can be essential when working with car hire companies in particular, not just to reduce theft but also to provide detailed information about collisions to assist with claims settlement. The next steps are to introduce pay-as-you-drive – and pay-how-you-drive – insurance policies, which have been launched for fleets in the UK. Widespread adoption of this could revolutionize fleet insurance and assistance over the next five years,” Parry said.
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