Rising Motor Premiums

Why has it gone up so much?

It has been a challenging few years for the motor industry, which has affected our policyholders through higher premiums.

We thought it would be a good opportunity to reach out to you to share some more insight into this, as although we cannot prevent these rising costs, it may help to explain why you will be seeing an increase in your motor premium this year.

There have been several factors that have contributed:
 

Supply chain issues
The UK heavily relies on global imports for both new vehicles and parts with the average vehicle composed of around 30,000 parts sourced from approximately 200 different countries. The past few years have seen parts supply chains significantly impacted by a variety of factors such as the Russia-Ukraine war, Brexit, and the enduring effect of the Covid-19 pandemic.

Recent data from the Association of British Insurers (ABI) confirmed that 40% of vehicle repairs are affected by delays in obtaining necessary parts. The cumulative impacts of the repair delays, increase in demand and costs for courtesy vehicles and the rise of vehicle thefts are driving up the cost of insurance premiums.

Advancing Technology
The increasing complexity of vehicle technology directly impacts the cost of repairs. With electric vehicles becoming increasingly popular and more expensive to repair, and with non-electric vehicles now being fitted with Advanced Driving Assistance Technology (ADAS) to help with parking, lane departure warnings, and pedestrian protection, this all impacts on the increased costs of repairs.

Labour shortages in the repair sector
The motor repair industry is currently facing a significant skill shortage due to the combination of factors. A decrease in EU immigration post-Brexit, employees leaving the industry during the pandemic, an aging workforce approaching retirement, and the challenge of attracting new workers to the sector have all impacted on the number of people in the repair networks. With extended repair times and longer claims settlement leads-times, this has resulted in the increase in repair costs.

Energy and fuel price rises
The motor sector has been greatly affected by the rising energy prices, leading to increased expenses in the manufacturing, repairs, maintenance, and day-to-day operations. The underlying pressures on energy costs are expected to continue as the effect of the increase in energy cap takes hold.

Vehicle theft and insurance fraud
Car Thefts have risen by 29%. Data indicates that during the cost-of-living crisis, people are more likely to turn to crime as a pressure to make ends meet. Criminals are stealing vehicles to order and capitalising on the rising cost of materials and shortage of parts by stripping and selling them.

There has also been a 17% increase in the application of fraud, particularly with misrepresentation to reduce no claims discount, and fronting, where individuals seek a reduced premium by listing someone else as the main driver.
 

Changes in our panel of providers

One of our main providers, Zurich Insurance Plc decided to withdraw from the personal lines market at the start of this year. We are doing our best to offer a solution to all existing customers when the time comes for their insurance to be renewed. We are also making every effort to seek alternative products for our panel to replace the gap that Zurich has left.

These are challenging times, but CSIS will continue to deliver the best standards of service that we can, and we want to assure you that customer care is still at the heart of everything that we do.

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