Market update – Motor, Plant & Equipment
The class remains relatively steady; however, insurers are attempting to push through increases and are using claims experience discounts (CED) – where the client receives a rebate for the previous year if they have had good claims experience subject to renewal – as a retention tool. These increases are driven by registered motor vehicles claims costs continuing to increase as vehicles become more complex and costly to repair.
The Australian climate conditions continued to be adverse throughout the 2020 period in New South Wales and Queensland. This has resulted in significant one-off losses experienced by insurers in respect of hail, flood and bushfire.
Storage risks continue to be difficult to insure, particularly due to hail events on the east coast of Australia. These risks continue to experience significant (upwards of 50%) spikes in pricing, or higher excesses being put in place for hail exposed locations.
Insurers’ claims records suggest that despite the increase in vehicle safety and driver aids, claims costs are not reducing as a result – and the average cost of repair per vehicle continues to rise.
There is still a preference to place plant and equipment under a contract works policy (where the machinery is not operated on public roads). Insurers are becoming more resistant to this and the trend is now to eliminate the extension under the contract works policy. So, it may be that policyholders are forced to purchase cover under stand-alone policies and bear the higher cost of insuring plant and machinery.
Policyholders with positive claims histories and loyalty to their insurer will benefit with steady coverage and rating expected in this class. Companies must focus on risk management, in particular driver education on larger fleets.