ILC ARTICLE

An open discussion

22nd November 2022

Electric vehicles may not be the future; the current mobility model is unsustainable; further disruption is on the way – these were just a few of the opinions put forward during an ‘open discussion’ held during ILC’s Exclusive Motor Claims Conference last month.

Taking part in the conversation, which covered everything from market trends to driver behaviour and sustainability, were Gary Barker, Claims Director, The AA; Catherine Hulme, Operations Director, Innovation Group; and Stuart Sandell, Assistant Vice President – Sales – UK and Ireland. Replacement, Leisure Partnerships and Flex-e-Rent Enterprise Holdings.

Introducing a new, innovative format, the session comprised a series of key questions posed to delegates, who responded digitally before the panel commented on the responses and added their own insights.

New normal

The first question asked whether the market was finally settling down after Covid-19 and whether a ‘new normal’ had been established.

The live poll found that 81% of respondents thought not, and that opinion was shared by Stuart, who said there were still too many variables and too many influencing factors in a state of flux to expect the industry to remain consistent and predictable for any length of time.

He said, “There is a lot more change still to come.”

One aspect of the ‘new normal’ expected to remain however, is working from home. This has influenced driving habits, with weekday traffic volumes still well below pre-pandemic levels, and many of the journeys that do take place far more localised. This means higher claims frequency, but smaller impact claims.

Gary said, “People who can work from home, do. I think that’s a basic expectation now so in that sense we’re closer to a settled pattern. But what it means for insurers in terms of claims frequency and severity probably depends on your book.”

Challenges

Delegates were also asked to rank the current challenges impacting the market, with claims inflation cited as the number one issue for 32% of respondents, ahead of the economy, energy costs, repair capacity, skills, supply shortages, and sustainability.

“It’s not a surprise,” Catherine said, “because a lot of the other things on the list interlink and effect inflation.”

Stuart suggested that claims inflation could actually be broadened out to inflation in general, saying that keeping costs down is a pressing concern for all business leaders at the moment.

However, for motor insurers, that is not a straightforward task in the current environment.

Gary explained, “What makes it even more difficult is we have rampant inflation in a time when insurers are unable to price for it. ABI data found motor premiums are cheaper now than they were in the third quarter of 2015; I can’t think of any other product that is cheaper now than it was seven years ago.

“That’s because of a convergence of things. The General Insurance Pricing Practices reforms in January, along with Covid, Brexit, and the war in Ukraine has completely melted the insurer’s ability to price accurately, and I think we’re going to see some very poor results from insurers this year as a consequence.”

Mobility

The panel also discussed the rising and unsustainable costs of mobility, as emphasised by Richard Steer during a previous session, who claimed that mobility costs for Steer Automotive had risen £1.2m annually.

The panel agreed that such steepling prices were simply too much for most repairers to absorb, and a change in practice needed to be found.

Stuart said, “If you just looked at mobility purely as a service provision it would be really obvious to say that responsibility shouldn’t sit with an accident repairer. They have enough things to do. But there are more parts to it than meets the eye. There are so many dynamics around pricing and remaining competitive.”

This is especially true for insurers, who are operating in an increasingly competitive market over which price comparison websites hold ever greater sway. However, Gary agreed that the status quo cannot remain.

He said, “Repairers have been at the bottom of the food chain but that is not the case anymore because capacity is restrained. They now have a strength in the relationship that they haven’t had in the past, and insurers are trying to do more to help with the provision of mobility because it is just so expensive and repairers can’t afford it.”

Sustainability

Delegates were also asked to comment on sustainability, and if the pandemic and its subsequent challenges have taught us anything, it is that only those businesses who are prepared to invest in their futures can expect to have one.

Being sustainable means different things though, encompassing skills, people, facilities, the environment, partnerships and technology. But all require a genuine commitment rather than just lip service.

Stuart said, “Whether we’re insurers or part of the supply chain, we all make promises to our customers and business partners and we need to be committed to deliver on them. We also need to be committed to our people to provide them with a great place to work and a career path.”

Mega trends

Being sustainable also means identifying and adapting to wider industry trends. Electric vehicles are too well-established now to be classified as an emerging trend, but despite a rapid acceleration in uptake during the pandemic their market share remains just a fraction of what many expect it to become.

However, questions have been raised: Are they are as environmentally-friendly as most believe? Can they really provide a lasting, viable alternative to ICE vehicles?

But if there are doubts surrounding the impact of EVs, the future of connected vehicles appears to be more certain and the journey towards a fully connected car parc irreversible.

Catherine said, “Everybody gets excited by technology so it will be interesting to see what people will do during their journeys when they don’t have to concentrate on driving.”

Stuart agreed, adding that connected vehicles offer endless opportunity for improved service and efficiency.

He said, “The connected vehicle is something that everyone in claims and the claim supply chain can really use to their benefit, whether that’s early notification of incidents, a better understanding of mileage and fuel usage, and vehicle condition. I think of all the mega trends, connected vehicles are the most exciting and offer the greatest opportunity.”

ILC’s Exclusive Motor Claims Conference – headline sponsored by Enterprise Rent-A-Car, and sponsored by EDAM Group and LexisNexis Risk Solutions – took place a Landing Forty Two in London in October.