Why might your vehicle insurance renewal increase?

You may have noticed that when you renew the insurance on your own car or your company vehicles the price may have increased, sometimes by a large percentage, in this article we want to give you reasons behind insurance companies increasing their premiums and also what we, as your broker, are doing to mitigate these costs

Increased Claims Costs:

• Repair Costs: Modern vehicles are equipped with advanced technology, which makes repairs more expensive. The cost of parts and labour has risen significantly in the last few years as vehicles become more complex and as repair techniques advance.
• Parts Shortages: Global supply chain issues have caused shortages of vehicle parts, driving up repair costs and, consequently, insurance claims.
• Repair Methods: As cars get more advanced and safer for occupants, they can become harder to repair and sometimes uneconomical to put back on the roads. Write-offs of more modern vehicles are not uncommon and what can look like a slight knock can result in a total loss.

Rising Number of Claims:

• Accident Frequency: As traffic levels return to pre-pandemic levels, the frequency of accidents has increased, leading to more claims.
• Fraudulent Claims: The rise in fraudulent claims, such as “crash for cash” schemes, contributes to higher costs for insurers.
• Accident Causes: Incidents arising from causes such as road conditions, potholes and flooding arising from climate change have a genuine impact on the number of claims being made. Larger wheels on cars and vans, for example, are easier to damage on potholed roads and we see claims to replace when those wheels get damaged.
• Vehicle Theft: Some vehicle makes and models are at increased risk of theft, as electronic systems can be unexpectedly bypassed by professional criminal gangs.

Inflation:

• General Inflation: The overall increase in the cost of goods and services, including vehicle parts and repair services, drives up the cost of claims.
• Medical Inflation: Higher costs associated with medical care for injuries sustained in accidents also contribute to rising insurance prices. For severe incidents, the cost of post-accident care has increased hugely in recent years and insurers must pick up the bills.

Economic Factors:

• Economic Uncertainty: Economic instability can lead to increased claim costs as people might delay vehicle maintenance or repairs, leading to more severe damages.
• Brexit: Post-Brexit regulatory changes and import tariffs can increase the cost of vehicle parts and repairs.

Regulatory and Tax Changes:

• Changes in insurance premium tax (IPT) rates can lead to higher costs for insurers, which are often passed on to consumers.
• Regulation: In the event of large claims, public bodies (such as Highways Agencies and Councils) can levy charges to insurers for road closures or clean-up operations. A diesel spill after a road claim can result in a clean-up charge of thousands of pounds, which adds to claims costs.

Increase in Uninsured Drivers:

• The economic impact of the COVID-19 pandemic has led to more drivers foregoing insurance, increasing the risk and cost for insured drivers and insurers.

Reinsurance Costs:

• Insurers often purchase reinsurance to mitigate their risk. Increases in reinsurance costs due to global events and financial market volatility can lead to higher premiums for policyholders.

What are we, as your broker doing to mitigate this?

Managing Claims

• Radius’ claims team actively manages claims costs by closely liaising with insurers to make sure that claims are followed up promptly and that costs are mitigated as much as possible.

Claims Reporting

• We work with clients to ensure that claims are reported within 24 hours, allowing Radius teams to engage with insurers and third parties sooner to reduce costs by concluding claims earlier.

Risk Management

• Radius works with clients to help drivers, managers and business owners understand how to reduce the likelihood of claims happening. From driver training to cameras & trackers and from vehicle parking to driver handbooks, there are tools and services available to businesses to reduce claim incidence and avoid the need to make a claim in the first place.

Insurer Partnerships

• Radius works closely with insurers to ensure that positive, active steps are taken with clients to reduce claims frequencies, mitigate claims costs and generally improve the risk exposure. Insurers know that Radius clients represent an attractive, long-term proposition and they want to work with Radius to bring our clients on board.