Inflation has stretched across all industries, and Motor claims is no different. This article drafted by our Group claims specialists outlines the overarching reasons and consequences you’re likely to hear about and experience.
The COVID-19 pandemic
The pandemic impacted supply chain as the world was placed on ‘lockdown’. This resulted in a shortage of semiconductors, which are computer chips used in a wide variety of technological products. For example, a fuel car requires upwards of 40 of these technology chips, and represent about 35% of the vehicle cost; without them our vehicles simply cannot be made.
The shortage is so significant that some manufacturing plants have been forced to close. As a result, the backlog of new vehicles means that second-hand vehicles are more expensive.
War in Ukraine
Conflicts in the country have directly impacted availability and delivery times of a variety of vehicle components. For example, BMW, Audi and Volkswagen have manufacturing resource in Ukraine for harnesses that hold vehicle cabling together. While they’re inexpensive, they are bespoke to each model.
Car plants have closed across Europe, as production can’t begin without these bespoke harnesses.
Employees in the motor industry are in decline
The HSE has said that the number of employees in motor has been in decline in the last few years. Brexit has accelerated this decline as overseas employees leave the nation. Finally, the cost of transport has also increased which has had a knock-on effect on inflation.
The Institute of the Motor Industry (IMI) is predicting that 160,000 vacancies in the sector will need to be filled by 20311.
Technological improvements in the motor industry
The introduction of new and innovative technology in electric vehicles has resulted in an unprecedented increase in car part theft, specifically lithium batteries, which are more expensive to replace or repair due to a lack of specialists in the industry (Only 6.5% of the current motor workforce is qualified to service EVs2). It also costs a great deal more to dispose of lithium batteries, which inevitably increases premiums.
How will the inflation of motor claims affect you?
Specialist Risk Insurance Solutions (SRIS) Claims Director – Motor, Jamie George, comments:
“The SRIS Motor Claims Team works tirelessly to assist our customers throughout the entirety of the claim journey, from Day One with Own Damage or Third-Party Capture, to minimise and mitigate costs on all heads of claim. The teamwork with the customer to always protect their interests and have their best intentions in mind.”
- Instruction of own repairer/preferred repairer = building on lasting relationships
- SRIS Own Repairer Network availability
- Management of own vehicle consequential losses including downtime and Vehicle Off road costs
- Mitigation of ongoing losses for Fault and Non-Fault Incidents
Third Party
- Report! Report! Report! Is something to remember, the faster you report the smoother the claims process will be
- Ongoing Triage of all Incidents including Fault/Non-Fault
- Market support with Third Party capture including offer of own services for repairs
How we can help
SRIS Client Relationship Director – Motor, Robert Wright, comments “Early reporting is a must, and it will allow us to help you. After any incident, policyholders and drivers must respond quickly to requests for information. Having the right reporting processes in place to provide us with meaningful information in a timely manner is vital as this will allow us to ensure liability is quickly established.”
What about injury claims?
Find out more about why claims inflation in relation to liability.
Sources:
1 https://tide.theimi.org.uk/industry-latest/news/imi-predicts-160000-shortfall-workers-uk-automotive-sector-next-decade
2 https://www.fleetnews.co.uk/news/latest-fleet-news/electric-fleet-news/2021/08/19/uk-needs-75-000-ev-ready-mechanics-warns-imi