Renewing a Growing Van Fleet with Poor Telematics
An underwriting team is renewing a motor fleet for a renewable-energy installer with 28 vans and 6 cars. The fleet has grown 40% in two years, driver turnover is high, and telematics show 14% of journeys exceed 75 mph and several late-night trips. There was a £95,000 own-damage claim last year when a young driver reversed into a bollard; no injuries. The broker asks for a clean renewal at the expiring premium of £62,000, arguing that the fleet has a good loss ratio. The underwriter's authority allows a maximum £75,000 deductible and a 15% premium increase without referral. The insurer's risk appetite requires telematics conditions for fleets with more than 20% of drivers under 25. The underwriter must decide renewal terms, including a possible warranty that all drivers complete an advanced driving course within 60 days.
1. Recommend renewal terms and justify them against the risk appetite and the insurer's underwriting authority.
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Do not offer a clean renewal. The fleet has a poor claims history, rapid growth, high driver turnover and telematics showing speeding and late-night use. The expiring premium is £62,000 against a £95,000 own-damage claim, so the loss ratio is adverse before expenses. Within authority, increase the premium by the full 15% to £71,300 and impose a £5,000 deductible, not the maximum £75,000. Require telematics with quarterly scorecards, a ban on late-night journeys except for emergency call-outs, and advanced driver training for all drivers under 25. Avoid a warranty that every driver completes training within 60 days unless the insured can realistically comply; a breached warranty suspends cover and creates disputes. Instead use a risk-improvement condition with an audit date, plus an inner limit for young drivers. Refer the account to senior underwriting if the broker rejects the terms.
2. Explain the legal effect of a breach of a policy warranty under the Insurance Act 2015 and why this matters to the proposed driver-training term.
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Under section 10 of the Insurance Act 2015, a warranty is a term whose breach suspends the insurer's liability for the period of breach; it does not automatically terminate the policy. If a loss occurs while the warranty is breached, the insurer has no liability for that loss, but cover resumes when the breach is remedied. This matters because a 60-day training warranty would be breached every time a new driver joins and is not yet trained. The insurer could then decline a claim even where the untrained driver was not at fault. The term must be clear, relevant and achievable. A condition precedent or a risk-improvement requirement with a realistic timescale is fairer and more defensible than a broad warranty.