Mobility solutions open up potential pitfalls over insurance cover

As more and more companies provide mobility packages for employees across Europe, they may be opening up a can of worms if they don’t fully consider the insurance implications surrounding such schemes.

That’s the view of independent insurance expert, Eelco van de Wiel, head of Fleet Insurance bv, who has over twenty years’ experience in the European fleet insurance market.

Van de Wiel, who works with a number of major fleet owners, including Fleet Logistics, and operates in around twenty countries, says that mobility budgets for employees present challenges in matching the insurance cover to fully meet the changing mobility needs.

The essential difference between mobility solutions and traditional reward schemes like the company car is that the insurance burden falls on the employee, and not the employer. With a company car scheme, the employer is responsible for providing adequate levels of cover and monitoring the health and safety of those employees using them, with a broad level of duty of care to the employee.

But with a mobility solution, the emphasis switches to the employee to ensure adequate insurance is provided, including personal and accident cover, across all forms of available transport – be that train, plane, cycle or car.

This opens up a whole host of potential pitfalls unless the level of cover is adequately thought through, and the level provided includes all transport media available under the mobility scheme.

“We are seeing huge interest in the provision of mobility budgets, especially in the Netherlands, but across Scandinavia, too, as employers look to broaden the incentives available to employees in markets where finding quality labour is a major challenge.

“However, what is not always fully understood is that mobility budget schemes transfer the responsibility for providing the correct level of insurance from employer to employee,” said Van de Wiel, who typically achieves savings of around 20% in insurance costs for his clients.

“This presents a number of potential pitfalls, and not only makes health and safety monitoring trickier across the business, but also increases the risk of under or over funding for insurance, including unnecessary duplication of cover.”

One area of potential concern is that of identifying high risk drivers – those having the highest incidence of accidents and posing the greatest risk to the organisation. With a conventional company car scheme, such drivers can be readily identified through insurer management reports and the fleet department’s own monitoring.

But, with a switch to a mobility budget and the onus falling on the driver to provide their own insurance, it may become more difficult to identify high risk drivers and put in place the appropriate interventions to manage the risk.

“With mobility budgets, identifying and monitoring high-risk drivers is undoubtedly trickier and other ways to monitor health and safety risks, such as invehicle telematics, may need to be installed. However, this presents problems, not least invasion of privacy, in its own right,” says Van de Wiel.

Another issue that needs to be considered is that of duty of care, which employers owe in general to their employees and at all times. Where an employee has an accident when self-insured but is on business travel, the employee may be justified in expecting the employer to contribute to the cost of the accident.

“This is a grey area and one that needs to be addressed when setting overall mobility budget policy, said Van de Wiel.

Another area of consideration is that a duty of care to the employee remains after the introduction of a mobility budget, for which the employer may already have taken out an adequate a level of insurance cover.

At the same time, the employee may also decide independently to take out insurance to cover against accidents during business travel, and this duplication of cover can increase costs across the board.

“This can be tackled by full disclosure between employer and employee to ascertain the levels of cover already in place,” said Van de Wiel.

With the emphasis on the employee to take out adequate insurance cover under the terms of a mobility budget, there has to be an element of trust between employer and employee and a belief that the employee will take out necessary insurance to cover, perhaps, a car, and accident cover for travel on other forms of transport, such as trains, boats and planes.

“With the growing incidence of mobility packages for employees across Europe and Scandinavia, the issue of adequate insurance cover to protect both employer and employee needs to be addressed as early in the process as possible, to arrive at a mutually beneficial and satisfactory conclusion,” added Eelco Van de Wiel.