Continued Motor Parts and Repairs Delay

What is driving up the cost of motor claims?

There are many compounding factors which have contributed to a claims cost increase:

The delay in the supply chain, alongside a significant delay on vehicle parts, has led to setbacks in car production and repairs. There is a global shortage of microchips and vehicle paints, as well as a smaller pool of hire cars available.

All claim types are integrally linked together, and if one sector is disproportionately affected, it can leek over into others. The construction industry has experiences issues in sourcing materials and labour, leading to increase property claims. COVID-19 absences are also hamstringing any progress suppliers are making to remedy the situation.

Suppliers and distributors are reassessing costs after two years of significant supply chain disruption, but this has recently been compounded by political actions. The war in Ukraine and resulting Russian sanctions has jumped up oil prices, meaning fuel is now much more expensive per mile. This goes hand in hand with the new Brexit regulations and a shortage of skilled eligible HGV drivers. Longer claims lifecycles are one of the conclusions and this has ultimately driven up claims costs.

One of the most significant reasons why claims costs have increased is because of the types of claims now being seen. Fewer low-impact claims are being reported due to reduced vehicle usage since the pandemic, however more commercial vehicle claims are being made, therefore raising the average claims cost.

Cars are also becoming more expensive and with more costly parts. The technological advancement of cars has come a long way, and as a consequence, cars are more quickly deemed a total loss due to the price of replacement. Workforces are also required to be more specialised to cater to these repairs, shrinking the pool of eligible garages and therefore raising prices.

Another factor in increased motor claims cost are the extreme weather events. The first quarter of 2022 saw the same number of weather-related claims as the whole of 2019. An influx of damage claims came as a result of flooding and trees falling. More claims means a tighter harder market.

Ultimately, many business’s ambition to go NetZero as well as new legislation on electric vehicles and green infrastructure could mean costs keep on rising. We are yet to see how the recent incline in cost of living will affect claims costs however we predict loss of earnings to be greater and claims lifecycles longer.

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