The 3 Year Commitment

In our original proposals, it was explicitly pointed out that the philosophy behind our concept could only be demonstrated over a minimum period of three years. Otherwise any quotation under the National Contract would merely be seen as a straight comparison of costs with other conventional offers with little or no substance behind it.

The signing of a 3 year commitment should be viewed as an incentive to ensure the new concept is given the best possible chance to work.

Some insurance industry Long Term Agreements - rare in the case of Motor Insurance - limit the amount of premium increases to a pre-agreed percentage, always assuming the loss ratio is within acceptable limits. Two disadvantages to this method are:-

a) in the event of a good year the profit is retained by the Insurer, and

b) in the event of a poor year the Insurer may break the agreement

Under the National Contract the Insurer is not a party and therefore is under considerable commercial pressure to maintain the "status quo". It is as much in their interest to be realistic in their premium demands, after negotiation with us, as it is for the Trust to control their own costs through effective Risk Management procedures. In any case, we have the choice of more than one Insurer to underwrite the facility, thereby introducing competition.