The cost of motor insurance - Transport Committee Contents

Written evidence from the Road Haulage Association (RHA) (CMI 15)


  1. ¾  HGV motor insurance sector appears to be generally functioning well, encouraging continuous improvement in standards of driver management and security.
  2. ¾  Excess charges are weighted heavily against young HGV drivers and industry needs to work around that to attract more young recruits.
  3. ¾  We see no pressing public policy issues we wish to raise.
  4. 1.  The RHA represents small, medium and large firms providing road haulage and logistics services and our members operate around 100,000 HGVs. We welcome the committee's short inquiry into motor insurance and the opportunity to submit evidence.
  5. 2.  Our interest is in respect of the way the insurance industry affects operators of commercial vehicles. In the main, the market appears to work well, rewarding those with a good claims record and encouraging those firms who have a poor record to do better through sharp increases in premiums. Transport companies are, increasingly, both required by insurers to provide a considerable amount of detail as to HGV risk mitigation measures and encouraged to provide details and commentary as to the work they have been doing.
  6. 3.  We have just completed our annual survey of haulage costs and it is clear that while premiums have risen in the past year, the rises have been contained. We will be reporting an average increase in insurance costs - comprising largely but not exclusively motor insurance - of 2.9%.
  7. 4.  The RHA actively promotes high standards. Through the RHA Security Forum, we meet quarterly with the police and insurance industry (Association of British Insurers). We actively promote good driver training and management to members and deliver specific Driver Development courses through RHA Training.
  8. 5.  Our chief concern is for the impact of motor insurance on firms' ability to bring on young HGV drivers. Under new EU "Driver CPC" rules that took effect in September 2009, it is possible to employ an 18-year-old to drive trucks - at any weight - provided he has the appropriate professional qualification. This is a reduction from 21 years.
  9. 6.  There are concerns that, with an ageing driving population, the UK will face a shortage of HGV drivers as the economy improves and a desire in any case to attract young people into driving, rather than have them change career post-25.
  10. 7.  However, the reality is that most firms now require drivers to be 25 years of age and preferably with driving experience. Contacts in the insurance industry suggest to us that while premiums are not loaded, excess charges in the event of a claim in respect of drivers under 25 ie can be doubled or trebled. Standard policies are based on over 25 + two years experience from the major underwriters.
  11.  8.  Drivers under 25 are judged on a case by case basis, depending on experience, claims record etc. Often, the driver involved can be a relative of the company owner.

November 2010

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