Cost Pressures Continue to Impact Insurance Industry
Insurance Times recently reported that in 2023, all regions in the UK have seen increases in motor premiums more than 50%, with an average price increase of 58%. UK motorists now pay an average of £995 per annum for their motor insurance, with premiums increasing for nine straight quarters from Q4 2021. The data was compiled from over 6m customer quotes per quarter and carried out by one of the UK’s biggest aggregator sites, Confused.Com.
This has been down to several unfavourable factors. Soaring costs of used cars, insurers are seeing a spike in costs of spare/replacement parts & materials, modern vehicles are more sophisticated with numerous vehicles requiring specialist labour skills and materials, labour shortages, extended loan and hire car periods and a jump in personal injury claims. Brexit and lower post pandemic production levels are also contributing to increase costs due to labour shortages, increase import costs of parts and materials and lower volume of parts that are harder and more expensive to come by.
The Isle of Man market is no different and we have the added costs of getting materials to the Island. As well as all the pressures mentioned above, Tower are also seeing additional costs of sending vehicles back to the UK for repair as specialist labour is not available on Island. Repairer, recovery, and storage costs have increased as the costs associated with these businesses costs, labour and running costs increasing as a result of the cost-of-living inflation widely seen.
As part of Tower claims process, we regularly discuss with repairers, lead time for booking customers in for vehicle repairs and supply issues.
The recent spate of poor weather has exacerbated an already strained position for the repairers. Lead times on parts, more non-drivers (major damaged vehicles) are taking space at the workshops, meaning courtesy cars are in short supply and with the existing backlog of vehicle repairs, garages are now looking at up to 3 months before they can book vehicles in for repair. Tower claims staff and the staff of all the local insurance brokers do relay this information to customers to manage expectations.
All these issues have accelerated and, in most cases, resulted in financial losses leading to several insurers pulling out of the motor insurance market in the UK and the Isle of Man.
Tower will continue to provide motor insurance to Island residents but are not immune to the market conditions and premiums will reflect these outside unavoidable financial pressures being put on the business.