The number of insurance-funded car accident repairs in Britain has fallen sharply as vehicle usage has declined, but insurance premiums have increased, reflecting what could possibly be a worldwide trend.
An estimated 4.55 million car body repairs will be carried out on British cars in 2012, down 22% from a peak of 5.81 million in 2006, thanks partly to high fuel prices causing a decline in car use.
Research by the British automotive research company Trend Tracker, in its biennial report on the car body repair market, shows that average annual car mileage has fallen 6%, from 14,115 km in 2006 to 13,261 km in 2011. Over the same period, the number of insurance claims reported to car insurers as a proportion of all cars insured – known as the “claims frequency” – has fallen from 18.0% to 13.9%.
In 2012, British insurance companies are estimated to have paid for 2.01 million car body repairs, 27% fewer than the 2.75 million repairs they paid for in 2006. Yet the Trend Tracker research shows that despite that fall, average private motor premiums have risen by 24%, from £349 (CDN$558) in 2006 to an estimated £434 (CDN$694) in 2012, due, insurers argue, to rising claims costs.
A recent OFT (Office of Fair Trading) inquiry acknowledged the rising cost of personal injury claims as a contributing factor to rising premiums, but also that the rising costs of third-party (non-fault) accident repair claims, including rental and inflated non-fault third party repair costs, were also a significant factor contributing to higher premiums.
Facing higher premiums and other financial pressures, motorists have increasingly opted for higher deductibles on their insurance policies. These reduce premiums, but make motorists liable for a sometimes hard-to-afford proportion of the cost of any accident repairs. For example, a not-uncommon £500 (CDN$800) deductible represents nearly 40% of this year’s average accident repair cost of £1,297 (CDN$2074). In many instances, where accident damage is not severe or the car is still driveable, policyholders with high deductibles have opted not to have their car repaired, or have sought cheaper alternative repairs. Trend Tracker’s lead analyst, Robert Macnab, says, “This trend is of concern, as it may mean that some cars are being unprofessionally repaired and may be dangerous.”
A hitherto growth segment of the repair market had been so-called SMART (Small to Medium Area Repair Techniques) repairs. Much lower in average cost than conventional bodyshop repairs comprising mainly minor dents and scratches, demand for SMART repairs grew strongly to reach 1.49 million in 2007. However, pressure on motorists’ pockets resulted in demand falling for SMART repairs to an estimated 1.16 million in 2012.