The shape of claims to come
19th June 2023Tweet
Claims and motor repairs are evolving rapidly as new technologies and new ways of working disrupt the landscape. These changes are putting pressure on bodyshops and insurers and to move with the times to ensure they continue to offer a safe and streamlined service to drivers.
Here, Solera Audatex considers the implications of the fast-changing landscape.
Claims costs have been rising and are likely to keep rising, even when cost-of-living pressures abate, thanks to a shifting road transport landscape and skills shortages.
The road transport landscape is undergoing the most rapid and remarkable evolution since the invention of the motor car. Welcome and essential as many of those changes will be, there is also considerable uncertainty, additional cost and an undeniable impact on claims costs.
As the twin pressures of poor air quality and relentless climate change require new drivelines and infrastructure, vehicle bodyshops are having to invest in new diagnostic equipment for electric vehicles. The Society of Motor Manufacturers and Traders (SMMT) said in April 2023: “One in every 32 cars now comes with a plug with 1.1 million electric cars now in use.”
A further 24,513 EVs were registered during May, up 58.7% on May last year to secure a 16.9% market share.
Bodyshops and repairers therefore need the skills to manage petrol, legacy diesel and battery electric vehicles. Although electric vehicles may ultimately be cheaper to maintain because they have far fewer moving parts, currently this represents a major investment in battery diagnostics.
However, the outlook is complicated by the lack of vehicle technicians. The UK suffered a significant exodus of EU vehicle technicians following Brexit and of domestic technicians during Covid. Office of National Statistics (ONS) figures show 30,000 fewer vehicle mechanics (a 12% drop) between 2019 and 2022. (ONS Business Register and Employment Survey).
Technician shortages are now affecting every part of the automotive repair and maintenance business, including in-house fleet workshops, dealerships and independents. Salaries have risen accordingly as these skilled occupations have gained a ‘write your own cheque’ rarity value. According to Institute of the Motor Industry (IMI) vehicle technicians’ pay increased by 5.5% in the six months to October 2022, and advertised salaries for tyre, exhaust and windscreen fitters grew by 21.3% between 2019 and 2022.
The technician shortage is particularly acute for heavier commercial vehicles, and the IMI predicts a critical shortage of technicians for electric vehicles, and for the advanced driver assistance (ADAS) technologies which are now being built into new vehicles. A Social Market Foundation report echoes this, saying that the UK will lack by 25,000 qualified EV technicians by 2030.
Typically, technician apprenticeships take three years to complete, so although starter numbers are encouraging, the industry will need help in the short-term managing this critical skills gaps, possibly from the Shortage Occupations List.
The IMI calculates 178,038 new recruits will be needed by 2031 to replace those leaving the retail automotive sector due to retirement, migration and occupational mobility.
Meanwhile, The ONS Services Producer Price Inflation Time Series (SPPI) shows vehicle maintenance and repair climbing from 115.6 in 2021 to 122.54 in 2022. Data analysis by Intelligent Motoring revealed repair costs to have risen 33% from the first six months of 2021, compared to the first six months of 2022.
With inflation only just dropping below 10% in April 2023, these price rises have continued.
Director of Valuations at cap hpi, Derren Martin, said, “Used car prices have risen enormously over the past two years, and continued strong in the first three months of 2023. The first indications of marginally lower prices were apparent through April and May.”
Martin will address many of the issues facing insurers and the need for up- to-date, dynamic valuations information at ARC360’s specialist EV event 2023 on 4 July at the Manufacturing Technology Centre (MTC), Coventry.
The factors affecting claims value don’t stop there. Parts shortages, initially fuelled by a lack of semiconductors, Brexit delays and the closure of much manufacturing during the Covid pandemic, caused repair backlogs, slow turnaround for garages, and extra time off road for vehicles.
The delay in getting vehicles fixed and back to their owners can also bump up claim value through the increased need for hire vehicles. Courtesy car availability has been a contentious issue for some months, with hire costs rising steeply – to the extent that Autocar recently reported that courtesy car costs were driving up total loss claims, as insurers found it cheaper to write off vehicles than to repair them.
All this is occurring against the backdrop of rising interest rates and rising energy costs, both of which are problematic for automotive businesses. The cost-of-living impacts upon motorists may also potentially affect servicing, maintenance and MOT compliance, which, as well as damaging the repairer’s bottom line, some commentators believe to be a road safety threat, potentially resulting in a greater number of claims.
Solera Audatex Sales Director, Neil Garret said, “It is a particularly challenging and uncertain time for insurers, with repair capabilities, cost inflation, skillset requirements, repairability and the availability of replacement vehicles just a few of the issues affecting both claims cost and the speed of claims resolution. At Audatex we focus on streamlining and facilitating the journey for claims assessor and bodyshop, enhancing and speeding their tasks with AI capability, and ensuring the fastest and most profitable job turnaround.”
As an integrated claims management platform, bringing together all stakeholders in the claims journey, Solera Audatex is uniquely placed to help motorist, insurer and bodyshop to achieve the most efficient and cost-effective resolution to claims, while improving customer satisfaction and lowering carbon impact.
Audatex’s innovative cost mitigation begins at FNOL. Qapter guides the motorist to capture vehicle imagery immediately, enabling an AI preliminary damage estimate, informed by up-to-date claims data from Audatex and valuations from cap hpi.
Our AI Estimating module identifies the parts best repaired rather than replaced and, for necessary replacements, bodyshops are able to source the parts required, whether OEM, non-OEM or ‘green’ parts.
In all, Solera improves business turnaround for the bodyshop, cuts cost for the insurer, and improves customer satisfaction.Tweet