Motor Insurance – Considering Ongoing Supply Chain Impacts
19 June 2023
It is widely accepted that the motor industry is struggling at the moment, with global supply chain issues really having an impact across access to parts as well as affecting recruitment potential as skilled workers are harder to come by. Along with the core Consumer Price Inflation (CPIH from ONS) annual inflation rate seeing the highest level since February 1992, up from 5.7% in March 2023 to 6.2% in April 2023, there are a lot of difficulties within the motor trade at the moment.
How is this relevant to insurance though? With the demand for parts still well exceeding supply, thanks in part to the lingering effects of the manufacturing shutdown during the pandemic, it is becoming tempting for many companies to write-off a vehicle rather than wait for the parts required to repair as this can often be the most economic option for them. With the rule of thumb according to Autocar being that a vehicle is likely to be written off if a professional repair costs more than half of its value, added time and money to source the parts can be seen to have a clear impact.
Reported by the Office of National Statistics (ONS) back in June 2022, manufacturing and motor vehicle repair companies were seeing the worst of the supply chain issues and this has clearly continued into 2023. As well as the raw material shortages for such as semiconductor chips, even those products that are in fuller demand are harder to source and transport. With various geopolitical crises happening globally, coupled with the rising freight prices and congestion at ports, each delivery becomes significantly more complex. This is without considering the change in demand forecasting that is required as electric vehicles become more prominent!
As one would expect, all of these impacts and delays lead to additional delays and claim costs. This will impact future motor insurance premiums with major insurers indicating that it could impact premiums to upwards of 12%. With more cars being written off, perhaps due to the wider supply chain situation rather than state of the vehicle, demand for insurance claims has increased.
Having the right insurance and broker has never been more important, as the right protection will ensure that there are reduced unnecessary queries and delays that could otherwise have been removed. A market reviewed by an independent broker will not only assist with delays on claims but also ensure that you have the best value for money.
We’re here to help
Our team has many years of experience in handling the insurance needs of the automotive industry, having excellent relationships with a large panel of insurers therefore able to provide you with the most cost-effective solution for your business. Our services offered include:
- Motor Trade Insurance Policies,
- Fleet Insurance,
- Haulage Insurance,
- Gap Cover,
- Uninsured Loss Services and
- Self-Drive Hire Insurance.
If you have a high number of vehicles, access to a dedicated claims manager is also included as part of our service – helping you ensure that you are as prepared as possible in the event that you need to make a claim.