Including fleet insurance within a leasing agreement may provide firms with the simplest way to cover their vehicles but general trends of consolidating fleet management and increasingly focusing on cost control are leading an increasing number of firms to rethink their strategies on insurance procurement.

According to Fleet Logistics chief executive Peter Soliman, in more mature markets, such as Germany, the UK and France, there is a trend for insurance to be unbundled from the leasing package.

In these markets, rather than opting for insurance as part of the leasing agreement, the tendency is towards individual and separate negotiations with local insurers or with a global or pan European insurers across several markets, which is often the most cost-effective route for the end-user fleet operator.

Fleet Logistics says that following careful analysis it has identified some very distinct reasons that companies may chose to divorce insurance from the leasing agreement. These include the rise of pan-European fleet management initiatives to harmonise the fleet across Europe, which required direct negotiations with individual insurers.

Companies' desire for cost-cutting and to reduce insurance premiums, which had been in the order of up to 30% in certain cases, have also played a role. In fact, there are sound cost reasons to individually negotiate insurance contracts independently of the car's lease supplier. Mr Soliman says: 'It may be more cost advantageous to have one major agreement with one insurer, generally already contracted for other insurance services, which can leverage the volume involved to help reduce premiums for the fleet operator.' 

Fleets looking to go down this route can also benefit from the increasing maturity of the marketplace according to Allan Briscoe, technical consultant – motor, at Aon. However he warns there are a number of issues that fleets need to consider.

He comments: 'The growing conversion rate for international fleet insurance programmes is testament to the increasing levels of experience and sophistication demonstrated by insurers and brokers in the global arena. Organisations considering the option are no longer entering uncharted territory. Rather they benefit from the knowledge of local market, legislation and taxation requirements that the insurance industry has gained over years of handling such arrangements. 

'Arranging a multi-national programme is not simply about finding an insurer able to provide cover in each of the countries concerned. Support services, such as for vehicle repair, claims handling and loss control are crucial in meeting programme requirements at local level, whilst optimising long term cost savings globally.

'There are undoubtedly barriers to overcome before a programme can be effectively implemented. The company must have clearly defined objectives and the individuals involved in programme development a mandate to effect change. Such mandate is necessary to overcome potential opposition if, say, an operation is able to arrange cover at lower cost locally. The overall savings and other benefits that a global programme delivers need to be appreciated by all.   

'Six months is considered an ideal lead-in time. This allows for information gathering, issue of cancellation notices in appropriate countries and for details of the new arrangements and procedures to be communicated to the business. A broker with a global office network can be of great assistance in these respects. 

'Information gathering is often more difficult than envisaged. Accurate claims data is desirable but not always available. Its absence need not be an insurmountable barrier though, as insurers have detailed accident statistics from which likely losses for the countries concerned can be assessed, until such time as the company's specific record develops.    

'It is common for programmes to expand over time. In certain countries, insurance provision may be part of binding lease agreements. Those vehicles cannot be included until they are replaced when the lease agreements end. Similarly, countries with different insurance renewal dates can be added to the programme mid-term as local arrangements expire.  

'Evolving markets and technological advances make geographical spread less of an issue. There will always be countries that cannot be accommodated in international programmes, due either to a lack of market representation or local laws. Advice on how best to make arrangements in these countries will be part and parcel of the service provided by the better brokers and insurers.'