PATONS INSURANCE: How have advances in technology affected taxi & PHV insurance premiums?
While taxi and private hire drivers need specialist insurance policies, they are still affected by what happens across the insurance industry as a whole. Patons Insurance looks at the influence of technology on the industry and what it means for taxi drivers.
The increasing number and value of insurance claims being made pushes up the cost of insurance for everyone – even those with no claims or convictions.
But this does not mean drivers must resign themselves to paying huge premiums. The aim of insurers is to manage the risks and provide the correct insurance cost to the right driver – those who are low risk pay lower premiums while those who are higher risk can expect to pay more. And technology plays a huge part in determining which category drivers fall into.
Chris Pracy, Paton’s head of business development and marketing, said: “Technology has fundamentally changed the taxi industry and therefore the taxi insurance industry which has to rate the risk of modern taxis and PHVs.
“Changes in rideshare technology allow PHVs to operate anywhere and short, local trips with an occasional long run are no longer the norm. Now, a driver can pick up a fare in one town, take them to a busy city, then accept a booking for an airport or train station while there, and so on. This means they are working across multiple cities, towns and locations.
“Their insurance might have been issued with the expectation that they are operating in one area, whereas the real risk can be very different.
“Due to the rising costs of vehicles, parts and repairs affecting claims costs, insurers aim to use all the
information available to them when determining the risk of each driver and the subsequent premiums they pay.”
CLAIMS FRAUD
The use of dashcams and CCTVs in vehicles, including taxis, has led to a drop in the number of fraudulent claims being made. In the past, it was one driver’s word against the other, and in a crash-for-cash claim which often targeted professionals such as taxi drivers, it could be difficult to defend.
Now, with video evidence, false claims are easier to detect and the footage can be used to prosecute those attempting fraud.
Video evidence from dashcams and CCTV also makes it easier to determine who is at fault for a genuine claim, which speeds up the claims process and helps reduce the costs involved in handling a claim.
Insurance fraud can also be detected by using databases to verify details supplied when taking out a policy or given during a claim. Someone might declare that they have no claims or convictions, or that they have been driving for longer than they actually have in order to secure a reduced premium.
While there are costs associated with checking databases such as Cue and DVLA for driver details, this is still much cheaper than the cost of a claim in which a driver has given incorrect details of their record and experience.
TELEMATICS
Another technological advancement that can help drivers reduce premiums is telematics. Although telematics can help reduce premiums by rewarding lower-risk drivers, cabbies aren’t rushing to implement it.
This is partly because discounts are not applied until after the first year of a policy when an insurer can assess the data. Drivers don’t want to wait to make savings.
There is also the fear that their every move is being watched – from speed and driving style (acceleration and braking) to location and time of day.
Many are concerned that while they might be a good driver and operate in a low-risk area, one or two mistakes could prove costly and not only void any discount, but could actually increase their premiums.
CENTRALISATION
Having a centralised database containing details of every taxi badge would ensure that accurate details are provided when taking out a policy or making a claim.
While the Government issues best practice guidance on taxi and private hire vehicle licensing to every authority in England, each authority has its own interpretation of the guidance. This enables situations such as private hire drivers licensed in one authority being able to work in another, which might be deemed higher risk by their insurers than the area which issues their badge.
Drivers are currently required to provide evidence of their badge and the area they work, but a central database would help ensure drivers paid premiums that were proportionate to the risk of the working area and not the authority they are licensed by.
SAFETY
While technology in new vehicles can be expensive to replace in the event of a crash, there have been huge developments to help keep drivers and passengers safe – and even avoid a crash in the first place.
Lane-assistance technology and collision avoidance are two features that are common in new cars today and can help avoid everyday crashes that are easily preventable and expensive to fix.
These can be particularly useful in congested areas in which taxis frequently operate.
Chris Pracy added: “Because of the ongoing pressures on claims costs, it wouldn’t surprise me that in the next five years, insurers will only cover new taxi drivers – who are already classed as higher risk – if they have telematics, dashcam and CCTV installed.
“Technology, when implemented correctly, has the ability to help reduce premiums by reducing claims costs, which would benefit most taxi drivers.”
