Claims inflation and mitigating costs to your business

The rising cost of claims is due to a number of factors. These include Brexit, fuel shortages, the increased cost of energy, the continued impact of workforce absences due to COVID-19, vehicle technology and environmental and legislative issues. More recently, Russia’s invasion of Ukraine is impacting the global financial market.

Specifically, claims within the automotive sector are being affected by delays in parts and increased costs. Parts for cars and commercial vehicles have been impacted by supply chain issues, in particular, due to issues with semiconductor computer chips, and vehicles are often off the roads for months at a time if they are involved in an accident.

In addition, labour costs have also increased. According to Allianz data1, in just the last year labour costs have risen by 6.5%, repairs by 6.6% and parts by 9.1%.

These problems are affecting most vehicle manufacturers, and subsequently retailers. It is vital that businesses mitigate costs in the event of a claim by doing the following:

• Notify your claims handler as soon as possible. This is paramount, and can mean the insurer can offer its services to a third party, and reduce hire charges which are based on the current climate (for example, difficulties obtaining parts are driving up this element).
• Provide as much information as possible to allow your handler to act quickly. In the event of an accident, take pictures of the other party’s registration and damage caused, and make a note of the number of occupants.
• Gather video evidence such as CCTV which can help speed up the settlement of your claim.

Delays in reporting an incident can mean lost opportunities to help, and a lengthier time to investigate an incident, which can drive up the cost of a claim even further.