The Government plan to support apprenticeship schemes across the UK has been well received by the motor industry. Whether you’re a car dealer or body shop, this could be a cost-effective way to develop the skills you need to secure the long-term stability of your business.
However, many traders are concerned that they may struggle to arrange insurance or suffer significant premium increases if they employ a driver under 25 and have steered clear of apprenticeship opportunities.
This need not be the case, and the financial benefits of a strong apprenticeship programme can far out-weigh any additional insurance cost.
Apprentices can deliver a 300% return-on-investment
In February 2014, the IMI (Institute of the Motor Industry) released findings from a two-year research project conducted in conjunction with the UK Commission for Employment and Skills to ascertain the ROI from an apprenticeship. The results were quite staggering:
- Apprentices typically generate an ROI between 150% and 300%
- Apprentices typically generate profit within 18-24 months, and often within 12 months
- Homegrown apprentice-trained technicians invariably outperform market-recruited technicians
- ‘Growing your own’ technicians through apprenticeships reduces long-term recruitment and training costs
- Apprentices learn company best practice and culture from the start
Government Employer Incentive (for 16 to 24-year-olds)
If the above statistics were not justification alone, in the 2014 March Budget, the Chancellor announced plans to support small to medium-sized businesses with the introduction of an Apprenticeship Grant for Employers of 16 to 24-year-olds.
The National Apprenticeship Service will provide a grant of up to £1,500 to eligible employers for each new apprentice up to a maximum of ten grants in total during the lifetime of the initiative. Full details of the plan and application are available from the apprenticeships.org.uk website.
IMI Chief Executive, Steve Nash has welcomed the news:
“Employers who have not had an apprentice in the last year can receive a grant of up to £1,500 for the first 10 apprentices they employ and with about 80% of the businesses in the retail motor sector fitting into the 50 or under employees category, this could be a fantastic chance to really open up the employment opportunities for young people.”
Motor Trade Insurance under 25-year-olds
While it is true that some mainstream insurers will shy away from providing trade cover for younger drivers, specialist traders insurance policies are available which can cover policyholders or named drivers under 25.
Trade policies can also be tailored to provide cover for apprentices by:
- Restricting use for drivers under 25 to motor trade only
- Restricting cover for younger drivers
- Restricting the type or size of vehicles which the apprentice can drive
- Increasing the policy excess
Insurers will look more favourably on young drivers who have had a full licence over two years and have not suffered any driving convictions or fault claims. Still, even this may not be a complete non-starter, and we suggest you speak to your motor trade insurance broker to discuss the various options available.
Teaching and growing your own staff can be extremely rewarding, not just emotionally, but also financially. Yes, insurance can be a hurdle, but by utilising the services of a professional broker and a supportive insurer partner, this should not stop you from developing a successful programme.
Steve Nash sums it up exceptionally well “Businesses must overcome their doubts about employing young people and invest in the future if our industry is to succeed as a whole”.
FREE Motor Trade Insurance Review
As a specialist Motor Trade Broker, Insync can call upon a panel of the UK’s leading trade markets, including several bespoke facilities. You can get a quote or book a free business insurance review via our website or call 033 0124 0730 for more information.