The transport and fleet insurance market could be in for rate increases over the coming year as insurers look to rectify losses, an expert has said.
Glenn Lambert, managing director of GT Insurance, said that a combination of factors are driving prices in motor and transport cover upwards.
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“The motor insurance market is in a loss position for insurers, with the transport segment following this trend,” Lambert told Insurance Business. “Rates need to increase on poorly performing segments or fleets to return the portfolio back to profitability for insurers. Unfortunately, this means that risks that are performing poorly will attract significant price increases which a lot of businesses are struggling with.”
A competitive insurance market, alongside an increase in traffic congestion and a shortage of drivers, are impacting both the transport industry and the insurance market that covers it. Decreasing operating margins and the flow on effect of spend for maintenance and risk management, as well as an increase in riskier driving behaviour and cost of repairs, are all impacting the industry, Lambert continued.
With a host of challenges, Lambert said that risk management will become “increasingly important,” because if risks are mitigated or properly managed, clients will be spared from escalating premiums.
“Now is the time to discuss risk management opportunities and strategies,” Lambert continued. “Brokers have a significant opportunity to demonstrate their value to their clients in a very difficult economic environment where operating margins are declining in general for business owners which is made harder by an increasing insurance spend.”
Over the coming year, Lambert said that prices on poorly performing risks or segments of the industry will continue to face price increases, which could also impact brokers.
“There may be a reduction in markets for brokers as a response to deteriorating results for insurers in this space,” Lambert said.
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