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Regardless of the health crisis, the automobile insurance market has been faced with repeated increases in costs which will have repercussions, from 2021, on the pricing of fleets. To mitigate this financial impact, active contract management is required for companies.
“We must expect a tightening of the insurance market with an increase in automobile premiums from 3 to 10% on January 1, 2021“, said Etienne de Font-Réaulx. Speaking at Fleet Activate 2020, the director of Théorème’s automotive department confirmed a trend reversal in the property and casualty market for two years, which ended a decade of lower costs. Insurers are faced with a decline in the profitability of contracts, in other words the loss ratio (S / P), due to inflation in repair costs. “The SRA benchmark increases by 3 to 5%“, supported the broker.
Despite a drop in the frequency of claims from 40 to 70%, depending on the sector due to confinement, it should be around 10% at the end of 2020. This will not be enough to restore the balance, yet regulations prohibit companies from offsetting these losses on the balance sheet with the return on financial investments. In other words, their insurance technical results will have to be in the green, even if it means making up for losses by correcting prices.
Play on three levers
Before contacting their broker, companies should identify their room for maneuver which concern guarantees, claims and price negotiations. “We support our customers in various arrangements to cope with certain price increases“, commented Etienne de Font-Réaulx. The main one being the use of a part of self-insurance, which implies to be advised on the limits of this type of assembly.”There is a real and immediate optimization to switch to self-insurance but be careful to supervise the work with the partner garages “, also warned the director.
Théorème also offers an application to direct drivers to networks for which repair rates have been negotiated. Second lever, improve its claims experience by controlling its road risk. “We are witnessing an increase in repair costs in 2020 due to spents of disinfection linked to Covid and rise tariffspplicated by garages who did not have enough work“, he continued. Last point to exploit: negotiate prices. “When renewing contracts with a damage guarantee, there is an opportunity to seize depending on the results“, slipped Etienne de Font-Réaulx. If they are stable, it will be possible to negotiate with his insurer a participation in the profit over the past financial year. But beware, good figures in 2020 alone will not be enough, especially since “This is an atypical year. You have to show good claims results over the previous three or four years to be credible.
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