The latest Consumer Intelligence motor premium data, published in the insurance trade media last week, concluded that car insurance premiums remain at seven year lows. The Association of British Insurers (ABI) quarterly data released at the same time indicated that premiums are still falling, hitting a six year low during the last quarter.
Ironically, these latest falls come as the squeeze on the cost of motor claims continues to exercise the industry. Supply chain shortages for parts and new cars have greatly increased the length of time consumers have to wait to get their vehicles repaired, or to pick up a new one if their car has been written off.
Motor insurers have always taken bent metal more seriously than bent people, no matter what they say otherwise.
Reforms championed by the insurance industry in the last decade (the Civil Liability Act) have greatly reduced the number of personal injury claims going through the system. Moreover, the government has clamped down on the levels of compensation for minor injuries sustained in a non-fault accident.
While the costs of claims for personal injury have, as a result of government intervention, fallen, the impact of the pandemic, broader economic volatility and other macro factors have had the opposite effect on the cost of repairing bent mental, and there's not a lot insurers can do about it, beyond tinkering at the edges.
There's evidence that insurers are choosing to mark down more vehicles in accidents as total losses, to avoid paying out big costs for providing non-fault customers with replacement vehicles while they wait weeks for repairs to finish.
Repairers are themselves having to deal with parts shortages as well as a shortage of skilled labour, so it's difficult for insurers to squeeze their repair networks even further, as the pips had already been squeaking well before covid.
Rising claims costs should eventually feed through to higher premiums again, but it is difficult to predict when that might be, not least because the market is still digesting the effects of the FCA's new pricing regime.
But with the cost of living crisis now the dominant issue for the government, as a matter of huge public concern, ministers want to avoid big increases in insurance premiums, so it will be interesting to see how long prices can remain at these levels, and what else insurers can do to keep the lid on motor claims costs.
None of these issues can be resolved by insurers acting in insolation; the spirit of cooperation between defendant and claimant sides that evidenced itself through the pandemic set a precedent that our industry would do well to continue in the current troubled times.
Dealing with claims costs successfully will need solutions generated by cross industry discussion. Thankfully there is evidence that this collegiate approach is no longer the exception, and ACSO is itself involved in a number of initiatives where we hope cross party talks will result in new agreements that better manage the claims process and, as a result, benefit the customer too.