Per trip insurance

Over the past few years, fleet insurance programs, policies and even providers have ebbed and flowed like those famous tides at Canada's Bay of Fundy.

Over the past few years, fleet insurance programs, policies and even providers have ebbed and flowed like those famous tides at Canada's Bay of Fundy. At one particularly low point, there were scarcely any companies left still offering insurance to carriers. Today, many fleets are self-insured for all but cataclysmic losses, while others have taken refuge in various captive insurance programs. No matter what, odds are your insurance provider is more involved in the details of your business than ever before, from keeping a watchful eye on driver turnover and training to making sure your profitability figures are adequate to keep the business afloat.

Now something else new in vehicle insurance has turned up on a distant shore. The largest general insurer in the United Kingdom, Norwich Union (www.norwichunion.co.uk), recently announced a “Pay As You Drive” insurance program for individual motorists and a two-year fixed rate plan for fleets that utilize Norwich Union-provided onboard driver monitoring devices.

In the case of Pay As You Drive, motorists are provided with in-vehicle GPS devices that are equipped with street-level mapping software from NAVTEQ (www.navteq.com). The technology package enables Norwich Union to calculate insurance premiums for each trip, taking into consideration factors such as time of day, type of road and mileage.

According to the company, pricing for the new program begins from as little as a penny per mile and bills look similar to phone bills, with the premiums for each journey calculated and totaled. “We are confident that Pay As Your Drive insurance is simply a fairer way of calculating premiums and gives customers greater control, flexibility and choice,” observed program director Iain Napier.

For fleets of 25 or more vehicles, Norwich Union has also deployed telematics to structure an insurance program that is wedded to a new driver monitoring solution called Fleetwise Care. The company provides (and maintains) telematic devices for customers. These are used to collect and feed driver performance data directly to Norwich Union via satellite. Information provided includes trip times, types and mileage.

In the UK, businesses have a “duty of care” responsibility under the law to protect others from harm, which includes managing the safety and welfare of drivers. Fleetwise Care is also designed to help fleet managers comply with this duty of care reporting responsibility by enabling them to identify where the potential risks are in their fleet, review individuals' driving performance and develop ways of improving overall risk management. According to the company, fleets using Fleetwise Care receive two years' fixed premium rates designed for fleets.

So what do you make of all this? Is this the logical next step in risk management or one step too far? After all, many carriers already gather driver performance data by one means and another, from electronic onboard data recorders to those “How's my driving? Call 1-800-” stickers on the backs of trailers, and share at least some of it with their insurance providers. Does this just take risk out of the system? Or are there others issues here?

Back when fleet communications and navigation meant phone booths and folding paper maps and you renewed your insurance coverage every year by mail, the world was a simpler, safer place. Ironically, today's technologies have both magnified some risks and become our means of choice for dealing with them. It can be a very difficult and delicate matter finding the best path in such an environment, rather like picking your way along a dangerous but scenic shore.

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