In recent years, the insurance industry has been heavily impacted by claims inflation and motor insurance is no exception to this. In 2021, motor claims pay-out inflation increased more than six per cent, taking the average cost per claim up to £5,3491. So, what are the immediate and longer-term impacts of this?
The global prediction is that by 2025, 85 percent of all vehicles will be fitted with some type of advanced driving assistance system (ADAS). This comes hand-in-hand with increasing costs of repair and replacement, as vehicles become more complex.
Semiconductor chips are a key driving factor in the innovation of vehicles and are increasingly implemented for on-board systems like touch screens and air conditioning systems.
But while considering rising costs, it’s worth bearing in mind that the average price of semiconductor chips has increased by 95 per cent.
In September 2022, battery electric vehicle (BEV) uptake increased by 35.4 per cent and had a 14.5 per cent market share. This advancement in vehicle technology is certainly a plus for the environment, but makes repairs more complex and expensive, requiring specialist knowledge and training for repair work to be carried out.
Driver-assist technology is also an advanced system fitted to vehicles, but this usually requires windscreen calibration to ensure that all cameras and sensors behind the rear-view mirror are working properly. In addition, there’s the need for specialist skills from a trained professional which comes at an increased cost.
How does this impact insurance?
The rising cost of repair is likely to outstrip the market value of the vehicle, making total loss settlements more likely.
And there’s more. A shortage of replacement parts and reduced workshop capacity due to staff and skills shortages is resulting in longer repair waiting times, which has a knock-on effect on the length of a claim. These factors plus a shortage of courtesy cars is also driving up costs for credit hire and credit repair services, which in turn increases the cost of the claim.
But while insurance is inevitably impacted by all of this, there are specialist brokers who have the experience to manage this. Aston Lark is one of these specialist insurance brokers that recognises and reacts to the wide variety of factors – including those that arise from longer repair times due to changes in technology – and remain committed to supporting their customers for as long as this situation continues.
Existing customers are encouraged to discuss and ask questions about existing policies by calling their Aston Lark representative. Potential customers are encouraged to reach out to one of their specialist teams.