The UK motor industry continues to suffer in turbulent times.
The well documented global shortage of semi conductors and supply chain issues continues to hinder the motor industry both here in the UK and across the European Union. New car registrations are down by 20.6% compared to last year according to The Society of Motor Manufacturers and Traders*. The second weakest May since 1992. These supply chain issues look to be further exacerbated by the Russian Ukraine war.
Whilst you may be struggling to get your hands on the latest Electric Vehicles or hybrid saloon, these challenging global issues are also having a significant impact on the motor insurance industry. In particular motor claims are bearing the brunt of these ongoing issues. Average claim costs and waiting times are increasing significantly. This is fuelled by a number of factors but mainly:
- Parts shortages – the UK has a heavy reliance on overseas parts. The lingering effect of Covid19 in the Middle East and Asia has led to the supply of parts remaining bumpy at best. More recent events in Ukraine mean that we are unlikely to see this situation resolved shortly.
- Delivery delays – parts are reaching dealers very slowly. Supply chains are being stretched as a result of Covid19, related staff shortages, Brexit import rules and a lack of qualified HGV drivers.
- Backlog at repairers – garages like many industries are struggling to recruit new staff.
- Replacement vehicle supply issues – particularly in the private hire industry where replacement vehicle requirements can be very specific.
The overall impact is that claims are taking longer to process and are costing significantly more than pre-pandemic levels. This increasing cost, known as claims inflation, is ultimately likely to cause motor insurance rates to continue to rise over the next year.
Some Insurers are proactively trying to manage expectations around repair time frames and courtesy car availability. Priority is being given to undriveable vehicles to help ensure customers are not kept off the road altogether. Non-OEM parts are being offered if it is likely to get the claimant back on the road quickly. Non-approved repairers are being accepted more readily.
In light of these challenging market conditions, ensuring that you have quality insurance is perhaps more important than ever. Our primary insurers are acting proactively and are working tirelessly to keep our clients on the road and disruption to a minimum.
Fingers crossed the situation starts to ease as we move towards 2023.
