The current economic climate is having a significant impact on insurance motor claims. In particular, claims costs are rising due to inflationary pressures and the cost of replacement vehicles is increasing due to Covid-19 and the ongoing war in Ukraine and Russia. In addition, the time taken to progress claims is lengthening due to the increased complexity of supply chains. Here, we explore these issues in more detail and consider the implications for business owners.
One of the key drivers of increased claims costs is inflationary pressure. This is particularly acute at present given the low interest rate environment and quantitative easing program being undertaken by the Bank of England. With the cost of living rising but wage growth remaining relatively static, consumers are increasingly turning to credit to fund their everyday expenditure. This has led to a sharp increase in the number of personal injury claims being made as a result of road traffic accidents.
The Cost of Replacement Vehicles
Another key factor that is driving upclaims costs is the cost of replacement vehicles. In recent months, there has been a significant increase in the cost of new cars due to Covid-19 and the ongoing war in Ukraine and Russia. This is particularly acute for business owners who rely on company cars for their business travel. As a result, many businesses are being forced to either reduce their level of cover or pay excesses that are much higher than they would otherwise be comfortable with.
The current economic climate is having a profound impact on insurance motor claims. In particular, inflationary pressures and the cost of replacement vehicles are driving up claims costs. In addition, the time taken to progress claims is lengthening due to the increased complexity of supply chains. Business owners need to be aware of these issues and take steps to mitigate them where possible.