Why will self-insurance be cheaper and more efficient than insurance?
Since the average claim cycle is 3/4 years (whereas insurance is paid up-front) those who switch to self-insurance will (on average) get one/two years free before they start paying for claims – thus the product will (on average) cause a significant cash-flow benefit – equivalent to a 10% saving (2 x 5% pa interest). VAT paid on Up2U’s services ought to be a recoverable input, whereas the (5%) IPT charged on insurance premiums is a pure cost to business. Insurers are constrained to pay a levy of up to c. £50 per vehicle to the MIB in respect of the MIB’s agreement to cover the costs of uninsured motoring. The lower premiums with Up2U’s service give a proportional saving here, too. Up2U’s claims service will be cheaper than insurance claims handling (on a direct comparison basis) because of waste driven out of the claims process, and the client’s control of the process; Up2U benchmarks its processing services at 18% under average insurance claims costs Self-insurance also encourages good
