Motor Claims Inflation & Insights
Claims inflation is something affecting many parts of the insurance world, due to a number of different factors. And when it comes to claims inflation related to the motor industry, there are many things driving up costs and prices. So how is the motor industry affecting claims inflation, and what can you do about it?
What is Claims Inflation?
Claims inflation is when the cost of a claim has increased in price, mainly due to the increase in costs – or lack of availability – of material goods, services and labour which is used to replace property after a loss. When claims inflation happens, the lack of availability or increase in demand will cause a rise in costs.
Claims Inflation in the Motor Industry
There are multiple ways in which disruptions in the motor industry are driving claims inflation.
Supply Chain Disruption
The motor industry, especially during manufacture, requires the supply chain to run smoothly in order for cars and other vehicles to be constructed in good time. And with multiple components that need to be installed in a specific order, not having the required parts just in time could significantly hamper productivity.
Currently, the lack of available vehicle parts and paint has led to increased assembly and repair times. So not only would the price of vehicle parts increase due to their scarcity, but labour costs would also increase as it takes longer for the workforce to construct a vehicle or install the repairs.
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As cars become more technologically advanced, they require more sophisticated parts in order for them to be repaired properly. These parts are more expensive than previous car parts and can be more difficult to replace. And for more advanced cars you require a specialised workforce to install parts and make repairs, which in turn drives up labour costs.
The number of electric vehicles being sold has also increased, leading to specific parts and mechanics who can work on electric vehicles being short in supply, driving up costs. Also catalytic converters are still at a risk of theft because of their desirability.
Whilst there is only limited data on the effects of reform, some trends have started to emerge. There are delays in court hearings and in obtaining medical reports, which means the claims lifecycle increases and the costs go up.
In addition to that, whiplash in itself isn’t always made as a sole claim, as it can be coupled with multiple other injuries, a loss of earnings and any psychological damage that may have been caused. It means that the value of a claim increases.
Reduced Vehicle Usage
It’s only natural that a drop in the number of cars on the road, which in part is fuelled by increased remote and hybrid working, has led to a reduced amount of motor incidents. And along with that, the type of claim has changed too. Fewer low-impact bumps and scrapes are being claimed but the overall number of claims is still increasing, leading to the average cost per claim rising.
How To Be Protected From Claims Inflation
When it comes to the inflation affecting the motor industry, it almost seems as if it’s inevitable that your cover will increase in price along with the price of claims. But the best way to get a policy that protects everything you require is by speaking to Full Time Cover, who can work with you to create a policy that perfectly suits your requirements, either personally or for your business. It also means that you won’t be paying for any cover you don’t need, especially if it’s driving up the costs of your whole policy.