Insurance is generally the third largest expense incurred by haulage & logistics companies, with the cost of premiums driven up by claims. Common mistakes in the early stages of making a claim could be multiplying the cost of your claims, making your insurance more expensive than it needs to be.
To illustrate the point, we’ve created a typical situation, in which an insured driver hits the back of a third party vehicle. The three different outcomes, referred to as ‘the good, the bad and the ugly’, are based on real life scenarios that we have encountered in the course of our work, showing how a lack of process and attention to detail in the early stages can increase the cost of the claim dramatically - in this case by 480%.
Outcome 1 - ‘the good’
The accident is reported on the same day and an Accident Report Form issued to the Third Party at the scene. The insurer contacts the Third Party and offers support services, including a replacement vehicle, thereby avoiding credit hire costs and enabling the insurer to control the cost of the repair. The decision to pursue Personal Injury is avoided due to the swift resolution of the repair and replacement vehicle. Duration of the claim: 10 working days, cost of claim £2,850.
Outcome 2 - ‘the bad’
The accident is not reported for 15 days, but an Accident Report Form is issued to the Third Party at the scene. The Third Party obtains representation via their insurance broker and a Credit Hire Organisation provides advice. The Third Party proves innocence and credit hire and repair proceeds. (The charges are deemed excessive but there is an opportunity to resist charges, as an Accident Repair Form was exchanged.) The Third Party proceeds with a Personal Injury claim. Duration of claim 18 working days, cost of claim £8,350, a 300% increase on scenario 1.
Outcome 3 - ‘the ugly’
The accident is not reported for 15 days, an Accident Report Form is not issued and the Third Party receives no communication. The Third Party obtains representation via their insurance broker and a Credit Hire Organisation provides advice, acting quickly and advising the insurer about the claim on Day 2. The Third Party proves innocence, and credit hire and repair proceeds. The charges are deemed excessive but NO opportunity to resist them as NO Accident Repair Form was exchanged. The Third Party proceeds with a Personal Injury claim. Duration of claim 18 working days, total cost of claim £15,686, a 480% increase on Scenario 1.
Take a look at an infographic explaining our example in more detail.
It stands to reason that there must be a robust claims management policy in place to manage losses as and when they occur, covering every stage of the claim, from First Notice of Loss through to completion, with collection of data at the earliest point absolutely vital.
Risk management tools such as vehicle cameras, telematics and regular claims analysis can all play an invaluable role, helping to dictate how claims are handled, minimising the effect to your business at renewal and helping to keep costs down.
Wayne Hardy, haulage director, PIB Insurance Brokers
