Market forces in insurance
25 March 2008
“Plant hire risk is peculiar,” says Ian Edmondson, director of client services for Senior Wright Insurances in Leeds, UK. “Insurers expect equipment to be well-protected [on the owner's premises] and are happy to insure it when on an open site. Then the risk depends on the security on the equipment.”
“We've got clients with good [loss] experience; claims are going down. [Ten percent during the past 18 months, he said.] If a client's claim experience is poor, premiums will go up.”
That explains premium changes individual rental companies may experience, but Mr Edmondson emphasised to IRN that the current, dominant effect on premiums is the “soft” general casualty insurance market worldwide. Re-insurers, who spread the risk taken on by companies writing equipment insurance, have excess capacity.
According to David Fryer, associate director of Henderson Insurance Brokers, a rental company specialist in Leeds, UK, “the overriding concern is writing business for market share, not profitability. The broker's job is to determine if it's going to be a long-term relationship [with the fleet owner].”
Mr Fryer's advice to rental companies: “Insurance is a safety net when regular measures fail. Run your business as if you're not insured. Commit to reviewing your exposure and to reducing risk.”
Both points seem to provide incentive for fleet operators to adopt asset management practices and technologies to reduce theft.