Insurers see an expensive third quarter for motor claims costs, as the ABI pushes for speedy discount rate reforms
The third quarter of 2017 has been the third most expensive quarter for motor claims costs since the ABI started tracking in 2013. Due to an increase in personal injury claims costs, vehicle theft claims and vehicle repairs, insurers paid out £2.1bn.
ABI assistant director and head of motor and liability, Rob Cummings has urged the Government to push forward with discount rate reforms so that insurers can stay ahead of spiralling costs.
Cummings said: “Increasing cost pressures continue to put the squeeze on motor insurance premiums, pushing up the average cost of cover to record levels and hitting young drivers particularly hard. Reforms to the Discount Rate cannot come soon enough. So it is vital that the Government pushes ahead without delay on its proposals, as well as implementing changes to the rules governing payouts for less serious soft tissue injuries like whiplash.”
Imports and tech raises repair costs
The vehicle repair bill hit a new record high. Including third party claims and windscreen damage, it reached just over £1bn which is the highest quarterly figure recorded so far, and is up 16% on the same period last year.
According to ABI figures, the average cost of repairing damaged vehicles has increased by almost half (46%) to £1,944 since the second quarter of 2013.
This is due, in part, to higher costs for imported parts and the complexity of technology in newer vehicles. Some vehicles now have more technology in them than an aeroplane.
Theft costs a growing problem
Office of National Statistics figures show that vehicle-related crime rose almost a fifth (17%) in the year ending June 2017. This is partly because high-tech devices mean cars can be stolen without a criminal having to force entry.
The cost of the average claim for the theft of a vehicle also reached an all-time high, at £6,582. Theft claims for the quarter cost £71m, which is up 25% on last year.
There were 13,000 claims, which was the highest since the second quarter of 2013.
According to the figures, vehicle-related crime also rose by 17% in the year ending June 2017. The rise in vehicle crime is being partly fuelled by the increasing use of high-tech devices enabling cars to be stolen without forcible entry.
Personal Injury costs on the up
According to ABI data, the cost of personal injury claims continues to pose problems for insurers. At £835m, the cost was up slightly (6%) on the previous quarter. The average payout, £10,120, was also up marginally (2%) quarter on quarter.