Inflation rate for motor claims settled in 2021 reached 6.2%
Average claims settlement times in Q1 2021 were two months longer compared to the same period in 2019.
Motor claims inflation is expected to accelerate in 2022 following a 6.2% increase in 2021, according to new research published by our network partner Willis Towers Watson (WTW).
Rising inflation last year caused the gross average cost per motor claim to reach £5,349 – the average for 2020 was £5,037.
A slowdown in average claims settlement times caused by the Covid-19 pandemic resulted in a temporary brake on escalating motor claims inflation.
However, rising accident frequency after a pandemic lull, surging global inflation, elevated used car prices and ongoing supply chain constraints pushing up repair costs have all contributed to “a sharp correction” in 2022.
Slowdown bottleneck
Bodily injury claims were taking insurers longer to process due to issues such as delays in the delivery of medical reports. Average claims settlement times in Q1 2021 were two months longer compared to the same period in 2019, WTW said. It has been a challenge for injured parties to be examined and treated due to Covid-19 restrictions and this has led to claims processing times taking longer than at any point over the previous four years. This delay in bodily injury settlements meant that settlements in 2021 had a distinct bias to lower cost vehicle damage only claims, temporarily preventing a sharper spike in claims inflation.Further findings
Policyholders in London have the highest average cost per claim at £6,189. The south west, however, recorded the lowest average cost per motor claim at £4,497. The cost to insurers to settle a customer’s vehicle accidental damage claim has increased by 20% between 2019 and 2021. The pandemic has also impacted the most common motor claim type. While ‘hit in the rear’ claims have traditionally been most common, 2021 saw these claims rank in second place while ‘hitting a parked, stationary car’ was the most common motor claim last year. A rear end vehicle collision is almost twice as expensive as hitting a parked, stationary car in terms of claims settlements, this is “a trend to monitor” in post-lockdown claims volumes.Any questions? Please don’t hesitate to contact one of our team.
Matthew.collins@ascendbroking.co.uk | Office: 01245 449060
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