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Broker Urges Drivers to Aim for the 1% Club

04.07.23 · News

Specialist fleet insurance broker, McCarron Coates, is urging fleet managers not to push their claims into the 300% club, simply by waiting more than 25 days to report them.  Submit a claim on day one and they can easily be in the 1% club or better.

Figures from leading insurers show a claim reported 25-30 days after it occurred, can easily cost more than four times the sum it would have cost, if the claim had been reported on day one.  Some put the increase at 396%.[i]

Although the swift reporting message has been appropriate for some time, it has never been more relevant than in the current period of claims inflation.  Claims inflation rode high at 17.4% even at the end of 2022, the highest for five years.  The average cost of a motor claim has soared from £4502 in 2019 to £6280 in 2022.[ii]

As economies continue to face the impacts brought about by Covid-19, more cross-sector challenges have emerged, including labour shortages, rising energy prices and a scarcity of raw materials caused by the ongoing conflict in Ukraine.  When partnered with the higher repair costs of electric vehicles, the inflationary impacts on claims costs are significant.  Containing claims costs has become a critical concern for both private and commercial vehicle operators.

Against this backdrop, it is also true to say that lingering labour backlogs may affect operations and increase costs, whilst the persistent pressure on energy prices can further strain budgets,” says McCarron Coates’ claims manager, Steve Stockley.

“The shortage of raw materials due to geopolitical tensions can lead to supply chain disruptions and inflated material costs.  Moreover, the repair and maintenance of electric vehicles can be costlier to manage than is the case with traditional internal combustion engine (ICE) vehicles, making it imperative for fleet managers to be vigilant in managing claim expenses.”

In such a complex and challenging environment, McCarron Coates says fleet managers must priorities efficient claims reporting and management, to mitigate the financial burdens they will otherwise face.  By promptly reporting claims and taking proactive steps to control costs, operators can safeguard their financial stability and continue to navigate the current trying times with greater resilience.

“The clock is literally ticking from the moment the collision takes place,” says McCarron Coates’ director Ian McCarron, “and the impacts on the cost of a claim are palpable. The minute an insurer loses control of the claim to a third party, that third party can start adding in significant costs – car hire, medical treatment for injuries, inflated repair costs and the like.

“The more a company or individual can do to control the cost of their claim and keep things in their own insurer’s hands, the more they can exercise a positive influence on their renewal premium.  One practical and highly useful thing that anyone involved in an incident can do is to report the claim immediately.  It’s as simple as that.”

However, reporting a claim quickly often means being able to get hold of someone on the end of a line.  Those fleets required to contact an insurer call centre, or whose brokers have been absorbed into large centralised control centres, are literally paying the price, as caller response times were woeful even before the pandemic and working from home regimes and have worsened since.

Many of those trying to report a claim simply don’t have 45 minutes or an hour to stand around on the end of a phone line.  If they are on the road, they need to be able to move their vehicle and get back to the depot, or next delivery point, if they can.  Precious time is lost, simply because the claims reporting system is too slow, overloaded and unresponsive.

McCarron Coates recognised the advantages of approaching things differently early in its history.  It established its own in-house claims team, to ensure its customers were in the best possible position to control their claims costs and also get ongoing advice as to how to prevent claims from occurring in the first place.

The team now numbers six and is handling 1500-1700 claims at any given time, setting itself an unmoveable target of 30 days in which to have a claims settlement offer on the table for each client, from the date of the first reporting of the claim.

However, it has gone further than this, to make its first notification of loss facilities for clients as effective and easy-to-use as possible, so as to circumvent the obstacles that can prevent swift claims reporting.

Avoiding the call centre route entirely, McCarron Coates’ clients have an App that enables them to quickly capture absolutely all the information they need to move their claim forward, direct from the roadside where the incident occurred. The App has voice-to-text capacities, can collate photographs, gives a precise GPS location for the incident and guides the driver through all they need to submit, to get the claim moving there and then.

Improving day one reporting to around 80% of cases, can see a net average 18% saving on premiums.  The average of day one reporting through a call centre is around 30%, according to experts.[iii]

In addition, recognising that some drivers struggle with technology or the English language, QR codes have been placed inside the vehicles of some clients’ vehicles, allowing drivers to simply scan the code to get a claim underway.

“Nobody should be allowing their claims to enter the 300% club,” says Ian McCarron, “and yet there are an awful lot of members within that club, due to post-incident stress, apathy, physical inability to get through to a call centre, poor administrative systems and a host of other reasons.

“We have the claims team that can keep the claim in our insurers’ hands from day one and the technology to help make that happen.  This is a huge advantage, as humans are only human and can forget or underestimate the importance of acting swiftly.

“Our aim is always to keep claims in the 1% club, through day-one reporting, primarily from the roadside.  This is virtually impossible to beat in terms of speed and that’s how it needs to be, if you want to contain your premiums. In a time of huge claims inflation, allowing a claim to drift can lead to a very nasty shock at renewal, when insurers seek to recoup the losses they had not factored in, which were caused solely by late reporting.”

To find out more about McCarron Coates’ approach to claims, visit www.mccarroncoates.com or call 0113 298 3489.

Press calls: Jane Hunt, Catapult PR, 0333 2424062 – jane@catapultpr.co.uk

[i] Insurer Allianz has produced the following data with regard to late reporting, which relates to a simple RTA scenario where an Insured driver hits the rear of a stationary Third Party (TP) vehicle with moderate damage caused. The third party was driving an S3 rated ABI vehicle (i.e. Ford Focus) and its driver sustained whiplash.

Notified on Estimated Repair outcome Estimated Hire Outcome Estimated Personal Injury (PI) Settlement Total Cost % Increase on Report Delay
Day 1 £1,500 £500 £3,000 £5,000 0%
Day 5 £1,800 £1,700 £4,000 £7,500 50%
Day 15 £2,600 £2,400 £6,500 £11,500 53.3%
Day 30 £4,000 £7,500 £8,500 £20,000 73.9%

*The figures produced in this table are illustrative based on assumptions triggered by delayed reporting which takes into account increased risk of credit facilities, loss of MoJ portal status, and escalation to more aggressive lawyer teams that build damages.

Meanwhile, QBE has produced the following. Here, the context was similar but the vehicle was a P5-rated ABI hire vehicle (BMW 520).

Notified on Estimated Repair outcome Estimated Hire Outcome Estimated Personal Injury (PI) Settlement Total Cost % Increase on Report Delay
Day 1 £7,127 £0 £0 £7,127 0.0%
Day 7 £8,845 £4,285 £900 £14,030 96.9%
Day 15 £8,845 £6,042 £4,070 £18,956 166.0%
Day 25 £8,845 £22,204 £3,830 £34,879 389.4%

*TQBE Insurance – he figures produced in this table are illustrative based on assumptions triggered by delayed reporting which takes into account increased risk of credit facilities, loss of MoJ portal status, and escalation to more aggressive lawyer teams that build damages.

[ii] Average claims costs:

2019 2020 2021 2022
Average cost per claim (gross)* £4,502 £5,037 £5,349 £6,280
% Change – All motor claims 9.80% 11.90% 6.20% 17.40%

*Source: WTW Claim Metrics. Figures based on settled claims over £150 and capped at £100k. *Exc. Windscreen claims.

[iii] Source = Insure Apps (insureapps.co.uk)