Insurance Post's Motor Insurance Research 2019

Motor Claims Inflation

The top four causes of claims inflation were said by respondents to be fraud, personal injury, credit hire and increased repair costs for technology incorporated into vehicles respectively.

Repair Costs

Increased repair costs were a repeat theme within the top ten responses of the reason for claims inflation. The increasingly sophisticated technology incorporated into modern vehicles has raised both the cost of parts and the cost of labour, particularly as a lack of competition in the market for skilled workers keeps prices high.

The potential impact that Brexit could have on the cost of imported parts could compound this problem further. Further, delays in delivery could have knock-on effects on credit hire claims.

Despite the increased costs of repairs, almost two-thirds of respondents were positive about assistive technology. One respondent said their data showed a reduction to accident frequency and severity. Another was less complimentary of parking sensors which could be de-skilling drivers but did agree that automatic emergency brakes reduce risks.

Keyless Car Crime

This was ranked as eighth in the reasons for claims inflation amongst respondents which was surprising to the Post.

A recent ABI publication states that vehicle theft has increased by 50% over the last five years. The cost of vehicle theft increased by 29% in 2018 and the cost of motor claims generally increased by 6%.

Keyless cars are a major component of this trend. Thieves can unlock vehicles parked outside buildings by using devices to capture and boost the signal emitted from the car towards the building to engage with the key inside. The car is then unlocked and can be started without the key.

Civil Liability Act 2018

The Government has focused on reducing claims inflation / spend in recent years. Introduction of the claims Portals / extension of the fixed costs regime, changes to funding rules and the introduction of s.57 fundamental dishonesty rules are all examples and further changes are afoot in the Civil Liability Act 2018 ("CLA").

The CLA is anticipated to trigger various changes in the industry, with some notable examples being:

Whiplash

Further changes to the whiplash regime are approaching in 2020 when the tariff for whiplash damages is introduced and small claims track limit (and therefore amend the recoverable costs) is increased for RTA and EL/PL claims.

Respondents were mostly optimistic of the cost of whiplash claims...