Auto insurers ‘face challenges from rising costs and supply chain issues’

Auto insurers are facing rising cost pressures and supply chain challenges, which may also mean some drivers are waiting longer for vehicle repairs.

Despite cost pressure on insurers, the average amount paid by motorists for insurance fell to its lowest level in more than six years in the first quarter of 2022.

The average price paid for comprehensive car insurance in the first quarter of the year was £416 – the lowest typical amount since the third quarter of 2015, according to figures previously released by the Association of British Insurers (ABI) .

Its tracking tool looks at the prices consumers pay for their coverage rather than the prices they are quoted.

Hannah Gurga, Chief Executive of the ABI, said: “Like other sectors, motor insurers are faced with rising costs, such as more expensive repairs due to increasingly sophisticated vehicles and more raw materials. costly, such as painting vehicles.

“A shortage of certain vehicle parts, exacerbated by global supply chain challenges, has led some customers to experience longer repair times.

“Insurers appreciate that many households are facing a squeeze in the cost of living as household bills rise.

“The auto insurance market is expected to remain competitive, and it can always pay off to research the best policy for your particular needs.”

An average car can contain up to 3,000 semiconductor chips, and the global shortage of semiconductors has been exacerbated by the Covid-19 pandemic and the war in Ukraine.

In addition to delays in the supply of some spare parts, there have also been shortages of skilled labor in the auto repair industry.

With longer delivery times for many new models, average used car prices have also increased – by around 30% in 2021.

A shake-up in insurance pricing earlier this year ended a “loyalty bonus” paid by customers.

New rules introduced in January mean auto and home insurers are required to offer renewing customers a price no higher than what they would pay as a new customer.

The Financial Conduct Authority (FCA), which introduced the rule changes, had previously raised concerns that home and car insurance customers could lose out if they repeatedly renew with their existing providers.

In addition to rising repair costs to manage, concerns have also recently been raised that cost of living pressures could potentially lead to an increase in some cases of criminal behavior in insurance claims.

In May, insurer Aviva said it expected false claims to rise further as the cost of living crisis worsens.

He said that as more households and businesses experience increased financial hardship, he expects to see more claims fraud, especially on home, small business insurance policies. and responsibility.

Some insurance fraud investigators also fear that dangerous cash-for-cash incidents, where criminals slam on the brakes at busy intersections and roundabouts so the driver cannot stop in time, may become more frequent.

Tom Hill, Detective Chief Inspector of the City of London Police’s Insurance Fraud Department (IFED), said last week: ‘As we have seen in the past, an increase in the cost of living and the resulting financial hardship can often lead people to commit fraud.”

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