What has the National Contract achieved so far?

Our approach to the problems outlined in the background section was to create an environment where stability is the ultimate aim. Following our research, and with the assistance of the NHS Purchasing and Supply Agency and a number of Trusts, we found a viable alternative to the traditional methods and procedures involved with arranging motor fleet insurance.

The key elements of our alternative concept were, firstly, the separation of third party and accident damage risks and, secondly, the provision of up-to-the-minute claims information, whereby we are able to analyse and identify areas of concern, in conjunction with the Transport Manager or other responsible person, at any time.

The accident damage losses are dealt with by means of a secure fund which we operate on your behalf, achieving a considerably reduced cost base compared to traditional insurance methods. The insurer partner only becomes involved should single losses be excessive or where the fund is exhausted. There are no retrospective or hidden costs.

This Is where the appeal of the concept is greatest.

By managing the fund at a lower cost, using our accident management facilities and rapid response risk management initiatives, we can ensure, as far as possible, that the accident damage fund is in surplus at the end of the insurance year. Over 80% of Trusts achieved surpluses after the first 12 months and this percentage was maintained in the second year.

If a surplus occurred using traditional insurance methods, this would immediately be to the benefit of the insurer and not the Trust, the argument being that the good years pay for the bad. It is our belief that the Trust should have control over this important element and utilise surpluses in one year to reduce the cost of future years and maintain that cost reduction using active risk management techniques.

We do not see this facility as a "quick fix" and neither would we argue that it is a cheaper alternative initially. You will see from our case study that the total cost of the National Contract exceeded the conventional cost in the first year. However, the 'payback' occured at the first renewal and more than compensated for the difference in subsequent years. We would expect to demonstrate over a period of 3 years that, by controlling the expenses and sharing information at regular intervals, the National Contract is the assured way forward to stability.