Why are the cost of insurance claims rising?
26/05/2022
Why are the costs of insurance claims on the rise?
The past 12 months have seen the cost of living rise because of the Consumer Price Index (CPI) increase.
High energy costs, rising fuel prices, transport, shipping and issues in the supply chain are all adding pressure to the situation.
Read our short guide which highlights the influences on claims costs and recent trends impacting insurance claims.
Supply chain disruption
- The shortage of microchips has led to global delays of new vehicle manufacture and therefore a surge in second hand vehicle value
- Vehicle repair times and shortages of parts have had knock-on effects to hire car availability
- Fuel prices and shortages
- Raw materials and labour costs increasing, resulting in higher claims in property
- Absenteeism due to Covid
Brexit
- HGV driver and skilled worker shortages resulting in a rise of accident and incident levels
- Disruption to the supply chain and materials
- Turnover, recruitment and retention of staff/employees
Covid19
Travel
- Homeworking has seen a decrease in property claims (escape of water and theft)
- Bike theft has increased as more people use this mode of transport
- Commercial vehicle claims have risen
- Reduced lower impact claims have driven up the average cost of claim
Place of work
- Slips on santiser, damage caused by safety screens have increased the number of liability claims from Covid procedures and systems
Future trends:
- Long Covid claims potential
- Homeworking assessment failings
- Recession claims, financial pressures and redundancies - claims against employers
Vehicle technology
- EV cars are on the increase
- Vehicle part are becoming more expensive to replace, leading to more total loss claims
- Catalytic converter theft on the rise
Whiplash Reforms
- Delays in obtaining medical reports and court hearings
- Increase in lifecycle of claims has increased the cost
- Fraudulent claims increasing due to cost of living and unemployment
- Ogden discount rate has meant increases to the cost of catastrophic claims*
- Psychological claims and layering is a tactic seen to be used by solicitors to drive up the value of a claim
Environment
- Extreme weather is becoming more frequent globally
- February 2020 saw the wettest month on UK record with Storm Dennis and Ciara
- A similar pattern in weather claims was seen in 2022 with Storms Eunice and Dudley
- In July 2021 the UK experienced a month’s worth of rain in 1 hour which led to intense flooding and an influx of insurance claims
- Continued warmer and drier weather over the summer months increases fire and subsidence risks/claims
- Green technologies will drive the need for higher cost materials and labour
What can you do?
- Tell us early about any claim. This allows us to control costs where we can
- Supply us with accurate and detailed information so we can act quickly
- Video evidence such as dashcam and CCTV can help settle a claim quicker.
Read our guide here
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