UK motor claims inflation is on the rise and expected to accelerate further into 2022, according to data from WTW.
WTW data revealed that the inflation rate for motor claims settled in 2021 was over 6%, higher than last year’s UK general inflation rate of 2.1%. WTW said this suggests a further rise is to be expected in 2022.
The company said that a slowdown in the average time taken to settle claims, due to disruption caused by the pandemic, has, until recently, acted as a temporary brake on claims inflation.
A combination of rising accident frequency after the pandemic lull, surging global inflation, elevated used car prices, and ongoing supply chain constraints pushing up repair costs, is likely to continue to put upward pressure on claims in 2022.
Tom Helm, head of claims consulting at WTW, said, “The fall in motor insurance claims during the pandemic has been widely reported, but less well understood is the bottleneck of bodily injury claims that are taking insurers longer to process due to issues such as delays in medical reports.
It has inevitably 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.”
Many players in the auto insurance sector are offering cost saving solutions to customers who exhibit more safe driving behaviours. One such offering includes Tesla’s, which deploys a driver safety score. FinTech Global recently spoke to industry executives to discuss Tesla’s venture into auto insurance and the effect on the wider market.
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