Understanding Motor Fleet Insurance: A Complete Guide for Businesses

Managing a large fleet of vehicles is a challenging job and if the unexpected strikes, you need a policy that can protect your operation, liabilities and assets.

The motor fleet insurance market presents unique challenges that can significantly impact your bottom line and with motor insurance premiums on the rise, it’s crucial to stay informed and proactive in navigating this landscape.

Understand the current motor insurance landscape

Managing costs is crucial for the success of any fleet operation. While the overall insurance rates in the UK have seen a reduction of 6%, motor insurance has largely defied this trend. In fact, during the first quarter of 2025, motor insurance premiums increased on average by 10%, which can lead to considerable cost increase for large fleet operators.

This increase has been driven predominantly by an increase in the cost of vehicle repairs.

How underwriters calculate motor fleet premiums

Understanding how insurers calculate premiums is essential for effective fleet management. Typically, the composition of an insurer's premium includes various factors such as:

Staying ahead in the motor insurance market

Despite the average rate increase in the fleet insurance market, there are still opportunities for well-managed fleets to secure competitive premiums. Here are some example strategies to consider:

Reducing claims costs

Analysis reports: Ask your broker for an analytical claims report. Or, ask whether they’re able to provide access to digital analytics solutions, like Marsh’s Blue[i], for data and actionable insights into your claims history. Take the time to understand it, as this should help identify both the frequent and costly claims. You’ll then be able to easily spot areas for improvement.
Prompt notification of claims: Timely reporting of incidents is crucial. A consistent lag in reporting can lead insurers to perceive a higher risk of inflated costs, such as credit hire and repair expenses. Ensure your team understands the importance of immediate claims notification.

Enhancing risk management

Driver selection: Insurers favour drivers aged between 23 and 70 with at least two years of experience, particularly for heavy goods vehicles. Minimising the use of agency or short-term drivers can also enhance your risk profile.
Driver training: Invest in driver training programs to reduce the risk of accidents and claims. By providing regular refresher courses you can reinforce good driving habits, including defensive driving techniques, as well as providing reminders on road safety, and traffic rules to minimise accidents.
Utilising telematics: Many underwriters now request access to driver performance data through telematics systems. By partnering with providers like Samsara, you can gain valuable insights into driver behaviour, which can lead to discounts on your premium.
Safety equipment and camera systems: utilising the additional support of camera systems and vehicle tracking, alongside your telematics technology allows risks to be investigated and identified ahead of time. Allowing for predictive risk analysis and supporting your business.
Safety audits: Conduct regular fleet safety audits to identify potential hazards, review incident reports, and address any gaps in training or policies to continuously improve safety measures to minimise accidents.

Consider utilising your own capital

As outlined earlier, the cost to transfer fleet risk to the insurance market is approximately 50% more than claims costs alone (when you include Insurance premium Tax (IPT) at 12%). This is an expensive method to deal with claims, however it does remove uncertainty and provide peace of mind for large catastrophic losses.

However, where claims costs are predictable, supported by high quality data and analytics, there is opportunity to consider a different approach that allows large fleet operators to remove:

Insurer Costs (15%)
Insurer Profit (15%)
Insurance Premium Tax (12%)

This can be done is a controlled fashion, after reviewing balance sheet strength, risk tolerance analysis and risk appetite discussions.

There is also the opportunity to recover the VAT (20%) on own damage repairs/replacement vehicles.

Take action today

If the rising cost of your motor fleet insurance is becoming an issue then our experts are here to help you understand the intricacies of your insurance needs and identify opportunities for improvement or alternative strategies (such as the above) to support future cost savings.

By leveraging our insights and resources, you can position your fleet for success in a challenging market.

Contact your usual Marsh representative, or contact our team today to discuss how we can support you in optimising your fleet insurance strategy. Together, we can ensure that you stay on the right side of the market and achieve the best value for your fleet.