Over the last few years there has been a huge growth in cell caps specialising in car rental. It makes sense to strip the car rental premium from the motor premium and run it separately, which in turn creates accurate income and claims cost analysis. Outsourcing this portion of the premium to a specialist underwriter who will keep you informed of market movements and trends as well as the specific claims and loss ratios can be a smart move.
The process of managing a cell cap has a number of parties involved:
Cell cap administrator – The core to running a successful and profitable cell would be to elect an experienced administrator which has strong ties to a reputable car rental company. One of the main factors for the administrator is to keep rental days to a minimum. This is done by releasing the rental vehicle to the insured the day the damaged vehicle is taken to the repairer, keeping constant contact with the panelbeater, and terminating the use of the rental vehicle the day repairs have been completed. By focusing on these areas, it reduces the cost of the rental dramatically, and in turn improves loss ratios. By allowing a rental to start a few days before the damaged vehicle goes to the repairer or allowing the insured to hold onto the rental after the repair has been completed makes no sense and adds to the total claims cost.
Insurer/underwriting manager/broker – The process would involve the car rental premium being paid over to the cell cap administrator on a monthly bordereaux. A simple instruction to the cell cap administrator would initiate the rental process. Once the instruction to arrange a rental has been received, the entireprocess from start to finish must be managed by the cell cap administrator.
Car rental company – The cell cap administrator will in turn arrange the rental with a car rental company. Costing of the rental charge to the cell should be competitive and market related as this has a huge impact on the loss ratio. The supplier should have a large fleet which is accessible countrywide as you never know where an accident could happen and where a rental would be required.
Insured – Once an insured has been in an accident or had their vehicle stolen, they are understandably not in the best state ofmind. Contact by the cell cap administrator should happen as soon as an instruction has been received and the entire process of how the rental works, including fuel deposits and excesses, should be explained upfront.
So why go the cell cap route? I don’t think the market realises the spillage incurred when it comes to car rental costs. Allowing a cell cap administrator to focus on the service and cost element would be a viable option and would reduce the total motor claims cost by more than is perceived.Having dealt with all the parties involved and how the process works, I cannot emphasise enough that the insured must receive excellent service when an insurance replacement rental is arranged. To set up a cell cap facility is a formality, but servicing your client when a claim occurs must remain priority.