At the time, we concluded the macroeconomic environment was placing too much pressure on the motor sector for any positive traction to be achieved.
Nearly a year on, the situation has deteriorated further; repair times for all vehicles have increased, with commercial vehicle repairs particularly delayed. According to a recent study, average fleet vehicle off-road (VOR) times in the UK have increased dramatically since the pandemic and vary across the UK. At 2.40 days, Northern Ireland has the longest VOR, while the shortest VOR wait of 1.82 days was recorded in the North West1.
Parts shortage: Availability of parts has been an enduring problem, caused by the war in Ukraine and the closure of China due to pandemic lockdowns – creating a global shortage of semiconductors. While supply chain problems are beginning to ease, the Association of Fleet Professionals (AFP) said its members were still regularly reporting problems with parts supply2.
Earlier this year in the US, Tesla was sued in two antitrust lawsuits alleging the carmaker’s monopoly of maintenance, repair services, and parts has led to higher prices and wait times3. A Guardian investigation in July suggested that certain car manufacturers, eager to counteract the drop in production during COVID-19, may be prioritising sales over repairs4.
No space: On top of parts, there is simply insufficient capacity in the UK to cater for all the vehicles in need of repair. Again, this has hit commercial vehicles especially hard. It may sound simplistic, but they take up more space in body shops and need bigger ovens and spray booths, meaning there is, literally, no space for them in some repairers.
This lack of space is compounded as un-drivable vehicles stack up at repairers' sites. Vehicles waiting for parts mean there is reduced capacity to hold other vehicles. With so many workshops at full capacity, vehicles sometimes need to be put in storage for a period before they can even be moved to the repairer to be inspected.
Lack of courtesy: Connected to this is a shortage of courtesy cars at the repairer networks, driven in large part by customers holding onto courtesy cars longer due to the delays in repairing their own vehicles. The situation has been exacerbated by the expense and availability of new cars for courtesy and hire fleets. With new vehicle costs rising over 20% and in some cases over 40% for used vehicles, The Head of Accident Management at AA Business Services stated in June that the days of being guaranteed a courtesy car while your vehicle is being repaired are largely behind us5.
Often insurers include a courtesy car in the cover when an approved repairer network garage is used, but caveating only when one is available. This has led to some insurers not providing courtesy cars when cars are un-drivable or in for repairs. Most insurers have agreed to hire companies providing cars in such circumstances. While some are absorbing the additional costs centrally, we are aware of at least one insurer adding it to the individual client’s claims experience.
Costly repairs: Repairs are more expensive due to a lack of supply of parts, wage inflation at garages, increases in used car prices, and more complex parts (a bumper or a wing mirror now includes multiple sensors and cameras).
Electric vehicles (EV) are also more expensive to repair and present a whole host of new issues. They are more frequently written off because of the cost of batteries and the need to replace them following even quite minor damage. There is still some wariness around how to deal with EV fires and they are often just left to burn out.
Costs are also feeding into third-party claims. Credit hire costs are becoming eye-watering given the length of time vehicles can be off the road, and credit repairs are also increasing.
What should clients do if they have an accident?
All insurers are struggling to manage motor claims; to help our clients deal with all this, Gallagher:
- Recommends all accidents are reported immediately to insurers. This means insurers have more opportunity to intervene with the third-party claim and reduce costs (Allianz quotes a saving of £1700 per claim if the third party can be captured within five days of an incident). They will also be able to book the vehicle into a repairer, arrange recovery where needed and discuss any requirements for a courtesy vehicle (where provided by the policy).
- Monitors the progress of the claim once it has gone into insurers. We would however ask that clients let us know if they encounter any undue delays or problems so we can investigate them as early as possible.
- Has regular and frequent discussions with all our main carriers to ensure that their service standards are where they should be, identify any problems, and agree remediation action as needed.
- Scrutinises the costs landing on clients' claims experience so that our clients are not penalised for insurers’ poor supplier management.