For many years now, the underwriting of fleets of commercial vehicles has been an annual, often price-based, transactional deal. Now there is an opportunity to truly innovate. But the development of technology, both in terms of vehicles themselves and the ways in which we can understand how they are driven and what risks they face, now means that risk management and transfer is changing. Conversations are now less about price and more about partnership and service.

David Gerrish, head of UK Motor at AXA XL, and Dougie Barnett, director of customer risk management at AXA Insurance, explain how advances in technology are changing the ways risks are managed for commercial fleets.

David Gerrish, head of UK Motor at AXA XL

This is an exciting period in the evolution of the motor car. It’s a far cry from the early petrol-fuelled three-wheeled buggies of the late 1800s and the iconic and revolutionary Model-T Ford of the early 1900s. Electric vehicles are becoming more commonplace, and fully automated vehicles are now very close to becoming a reality on our roads.

Added to this, vast leaps in technology that give better insights into how vehicles are driven and the hazards that they might face on the roads, have led to big advancements in the way motor fleet risks are understood, managed, mitigated and transferred.

The move to EVs

As part of its ‘10-point plan for a green industrial revolution’ the UK government has committed to phasing out the sale of all new petrol or diesel-fuelled cars by 2030. And the switch to electric vehicles is already gathering pace. At the end of February 2022, there were more than 420,000 pure electric cars on the roads in the UK, and more than 780,000 plug-in models, including hybrids. In 2021, 11% of all new cars sold were electric vehicles.

Many of the UK’s largest fleet operators have made commitments to move to EVs and, importantly, to work with the Government to find ways to improve infrastructure to make the 2030 target a reality.

At AXA UK and AXA XL we have been working closely with our motor fleet clients to understand the changes in risk profiles that the move to electric vehicles is likely to cause, and the opportunities this change presents for improved risk management and transfer.

There are many risk management benefits arising from a move to EVs. Among other positives, a commitment to reducing carbon emissions plays an important role in many the Environmental, Social and Governance (ESG) pledges that companies have made, and to which stakeholders of all types are paying ever greater attention.

Electric vehicles also will likely result in lower management costs for many fleets, because EVs need to be serviced much less frequently than petrol or diesel cars; EVs require a service once every two years, compared with the annual service requirement for petrol or diesel cars.

But there is still a way to go before most fleets can realistically become fully electric, and there are some important risk considerations to be taken into account along the way. Despite commitments to improve the charging infrastructure for EVs, there is currently still a lack of charging points in many areas.

A recent report by Deloitte noted that while the number of public EV charging points in the UK doubled in 2020, installation is still patchy across the country, and there is still “a way to go” if the 2030 target of phasing our petrol and diesel cars is to become a reality.

Risk managers need to think about this as their companies move towards EV fleets. Understanding drivers and their risk and daily driving profiles is important here. For some drivers, a lack of easy access to an electric charging point could be a great cause of stress. For example, some drivers may live in flats without on-site or kerb-side charging points nearby. The difficulty in accessing these charging points and the related ‘range anxiety’ that this might produce, could make drivers extremely stressed – which may also, of course, affect their driving.

Fleet risk managers can better understand the profile of their drivers and risk factors such as these by examining data on weekly mileage, and whether the routes driven are mainly short-distance urban trips or longer, using motorways or difficult to charge trips, using rural roads, for example.

Dougie Barnett, director of customer risk management at AXA Insurance

The road to automation

The development of fully automated, driverless vehicles is no longer the stuff of science fiction. It’s becoming a reality. Both AXA XL and AXA UK have been closely involved in projects to enable the development of autonomous technology by working to understand the risks involved and – crucially – build risk management into the development of the technology.

AXA recently made a series of recommendations to the UK Law Commission, which is examining ways in which to regulate autonomous vehicles on UK roads. We want to support and enable the development of driverless cars, but the deployment of autonomous vehicle technology must, we believe, be underpinned by a clear legal and regulatory framework that makes safety the priority.

The Law Commission’s report is of huge interest to the underwriting community as it provides useful data on fault and liability, which will feed into the understanding of the risks and opportunities of autonomy.

It will be important to win the public’s trust before autonomous vehicles will be widely adopted, and we believe that risk understanding, management and mitigation will be vital to this effort.

AXA UK, along with 17 other major UK businesses recently signed a letter to the Prime Minister, urging the Government to announce primary legislation for automated vehicles (AVs). With economic and societal benefits, such as improved road safety and reduced emissions, creating a legal and regulatory framework is fundamental to ensuring the UK remains a leader in the development and introduction of AVs.

Data, data, data

Against the backdrop of these exciting developments in motor technology, the insights available to risk professionals and underwriters about the ways cars are driven, the way accidents occur and how the safety and wellbeing of drivers can be improved has increased exponentially.

The use of telematics for fleets is now commonplace thanks, in large part, to the development of the technology and the reduction in how much that technology costs. Cloud computing not only means that telematics technology is cheaper, it also means that the data derived is more understandable.

For example, it’s now possible to use mobile phone apps to deliver data to fleet drivers and their companies and to give immediate analysis and risk information. In-car dashboards can now be overlaid with telematics information to give risk advice to drivers in real time.

Data security is important here, and often data is anonymised to maintain privacy and security. And it’s important that risk managers communicate effectively with drivers to reassure them that this data is not being used against them – indeed, that it is often used to protect them from danger and blame. This data can be used for defending claims against drivers, as well as to enact safety measures to protect them while they are doing their job.

Camera technology, both inside and outside of vehicles has also vastly improved and can give 360-degree views of how vehicles are being driven and also of risks outside of the vehicle itself. The existence of these cameras can have a positive effect on improving the behaviours both of fleet drivers and also of other road users too.

As risk professionals and underwriters, we are working hard to help our clients to understand this data and use it to the benefit of all road users. As the technology evolves the way we underwrite risks is evolving too. This is truly the time to innovate. The motor market is in the thrusts of real and exciting change, and the ways in which we can derive, understand and use data insights is transforming risk management and transfer for motor fleets.

As electric vehicles become more common and autonomous vehicles become a reality on our roads, the risks and rewards of these new technologies will continue to change and develop. This is no time to stand still.