UK motor insurers paid out a record £11.7 billion in claims in 2024, with rising claims costs driving up the price of fleet insurance premiums.
Research by professional services firm Aon reported that the average claim cost rose to £5,300 in the fourth quarter of 2024, fuelled by higher repair costs, a rise in vehicle thefts and vehicles spending longer off the road for repairs.
Driving up costs
Aon’s report found that rising claims costs – particularly in the £100,000 to £750,000 loss bracket – are directly affecting the fleet insurance market.
Head of Claims Nikki McCulloch said: “Rising claims costs, driven by inflation, evolving vehicle technology and extreme weather, are putting real pressure on fleet premiums. But this isn’t inevitable.
“Fleets that use claims data, telematics and EV insights to target risk hot spots and strengthen driver behaviours will not only improve outcomes, will also be better placed to secure stronger terms from insurers.”
The Association of British Insurers (ABI) reports that as well as record claims payouts in 2024 – which were 17% up on the previous year – repair expenses added up to £7.7 billion for the year, with complex vehicle technology making repairs more expensive and time-consuming.
The ABI found that although the average claim settlement had decreased from 420 days in 2023 to 350 days in 2024, it remains a long process for organisations to manage.
Managing the risk
In a drive to keep fleet insurance premiums down, Aon is encouraging businesses to review claims data to identify higher-risk areas.
Businesses are also warned to beware of fraud and exaggerated claims, with ABI figures showing organised criminal gangs were responsible for 40% of motor insurance fraud in 2024, ranging from staged accidents, to fake injuries (29%), cash-for-crash incidents (11%) and ghost-broking scams (10%).
Aon warned: “Sophisticated criminal networks target commercial vehicles due to the perceived higher limits and complexity of fleet claims. With mixed injuries, vehicle write-offs and exaggerated hire car charges, commercial fleets are particularly exposed.”
Aon recommends that businesses should introduce internal fraud detection procedures if they don’t already have them in place. This includes training staff to identify the warning signs, as well as using telematics, dashcam footage and checklists for gathering evidence.
Regular audits of this data can help detect patterns of suspicious activity.
Tech trouble
As businesses turn to EVs and autonomous vehicles to make efficiencies in their fleets, one of the biggest drivers for claims is warranty repairs, which are 35% to 50% higher than petrol and diesel claims. Batteries represent the biggest cost, with prices for replacements ranging from £8,000 to £12,000 and taking 12 weeks longer than standard warranty repairs.
It is also important that drivers receive training on how to use EVs, including charging, dealing with faults and emergency responses.
While trials of autonomous vehicles are currently taking place, many fleets already have technology such as lane-keeping and auto-braking systems which help reduce the risk of a crash.
As well as ensuring systems are functioning correctly, businesses need to be aware of the liability difference between human actions and software.
Whatever the vehicle and however it is used, it is vital that the right cover is in place – especially when it comes to the cost of the vehicle – to protect a business against an expensive loss or repair.
Being prepared
Having taken precautions and put contingencies in place, accidents involving company vehicles happen and drivers and staff should know what to do.
Aon recommends that all drivers fully understand and keep up to date with changes to the Highway Code and understand liability.
They should also be familiar with the company’s collision protocols to ensure they gather as much information as possible for a claim.
Aon said: “Insurers are placing a greater emphasis on those measures taken by fleet operators that reduce the frequency and severity of claims. This includes investment in driver training, adoption of telematics and robust post-incident investigation processes.
“For EVs, the emphasis extends to specialist repair pathways and battery management protocols. Businesses who can evidence strong, data-driven risk management are better positioned to differentiate themselves in a difficult market – not only improving their claims performance, but also strengthening their negotiation position with insurers.”
