What’s shaping claims and repairs in 2023
30th June 2023Tweet
The automotive repair and motor claims landscape has been shifting substantially for the last four years. Covid was a key driver in this transition, with inflation, skills shortages and supply chain challenges – not to mention changing customer habits – only accelerating the evolution.
In this article, we speak to ILC partners e2e Total Loss Vehicle Management, Repairify and Synetiq to find out how they are adapting to meet new demands and satisfy customers.
Chris Hulls, Business Development Manager, e2e Total Loss Vehicle Management:
Use of reclaimed parts is increasingly shaping claims/repair in 2023. Reclaimed parts represent a viable alternative for non-safety related items where availability and compliance with work provider, repairer and policyholder relationship allows their use.
Intelligent IT solutions are providing a high level of data from estimating and bodyshop management systems to allow automotive recyclers to make better educated inventory decisions, supporting practical, logistical processes that make the use of reclaimed parts easier to integrate into repair decisions. OEM part numbers are derived against all non-collision items allowing accurate and fast application. Where available, paint codes are also added to tag number details and enable increased part matching.
Using reclaimed parts in motor claims repairs can act as an in-built total loss avoidance strategy for insurers and represents the opportunity for increased volumes of fulfillable work for repairers, avoiding parts delays and the potential of associated mobility costs for policyholders.
Reclaimed parts provided via the e2e network of automotive recyclers are OEM parts that have been validated and certified by its members using strict and disciplined internal audit processes. e2e members are all certified to the VRA UK Standard for Reclaimed Parts which means parts are supplied quality graded, provenance tested and warranty assured. Sourcing reclaimed parts via e2e guarantees compliance to an increasing number of insurers’ parts procurement policies. The largest majority of parts supplied by e2e are high value items that are available off the shelf rather than still requiring dismantling. They are typically despatched for delivery within 24 hours of order confirmation.
Repairers can expect to achieve a discount from OEM RRP of about 60% although this can increase to in excess of 75% in certain circumstances. Where repairers are allowed to benefit over and above using OEM new or AM new parts, and are in a no worse financial position when taking into account the potential of re-work, reclaimed parts present an excellent financial opportunity for all stakeholders, and the environment.
Phil Peace, Managing Director (SVP) International, Repairify:
This is an extremely broad view and needs to be reviewed in the context of the economic and market backdrop. We are still seeing inflation rates of 11%-plus and interest rates increasing by five per cent with the government forecasting this will continue to increase whilst they target inflation of two per cent.
The following statistics show some of the impacts on the claims sector: claims volumes are now in excess of pre covid levels, average repair cost is up £300 to £350 and premiums are up over 11%. On the supply side vehicle volumes have increased year on year but remain way behind pre Covid levels and whilst we are seeing lots of communication relating to electric vehicles as a percentage of registration over the last few months they are flat.
How does this affect our specific segment?Well firstly we are seeing an increase in vehicle technology with all new vehicles now having ADAS components and 20% of registration being electric. This leads to various challenges, including the cost of buying new tooling to keep up with technology and the need for the technicians to undergo training to ensure they have the necessary skills and knowledge to complete the jobs. There is still a skills gap in the industry because technicians either retired or move on to do something else, and we do not have enough people coming through apprenticeships in the industry however, there are some great schemes encouraging this, but they take time.
In addition, secure gateways affect the process because they can have the car locked down, so only certain tools and potentially people can work on them. This means the repairer will need to identify a supplier with the appropriate tools to undertake the work, be it a dealer, subcontractor or remote provider. A couple of these options take time and can add to key-to-key times.
There are also parts issues that are still having a direct impact on repair times. An example of this is an airbag sensor on Audi Q4 or a radar for a Mercedes A Class are both on six-month backorder, which impacts decision making and total loss. We are certainly seeing this being the case with Electric vehicles as organisations and technicians don’t have the knowledge or experience to repair the vehicles and/or parts are not available.
In terms of production companies supply chains like ourselves, paint companies, adhesive manufacturers and equipment manufacturers and their supply chains, a number of companies found themselves exposed in covid and the recent years with single points of supply that failed, what we are now seeing is that organisations are focusing on ensuring they have a balanced supply chain.
Finally, we have had consolidation and we anticipate more, we have a reduced number of repairers and claim volumes increasing, combined with parts delays, which are still resulting in some capacity issues, longer key to key times and total loss.
Sarah Hirst, Client and Green Parts Director, SYNETIQ:
As an integrated salvage, dismantling and vehicle recycling company that provides a range of business solutions to our insurance clients, we are heavily involved in the claims process from start to finish. This gives us an industry-wide overview of what is happening and gives us the opportunity to respond in the best way possible to continue to support our clients.
There are multiple factors currently shaping the claims and repairs landscape – one major player being inflation.
It’s all over the news, we’re feeling it personally, and the UK business market is certainly feeling the effects. Current inflation is being driven by energy, fuel and food costs, which is ultimately ramping up prices across the board – including that of vehicle repairs.
The cost-of-living crisis is certainly making consumers think differently, with many suppressing their spending and looking at cost-saving initiatives to keep afloat.
Repairers are going through the same thought process as their margins continue to be squeezed thanks to increasing production costs. Our green parts sales show that the CO2 and cost savings achieved (up to 75% off RRP) are an attractive addition to the claims and repair process.
Sustainability is another hot topic for 2023 as the pressure continues for insurance companies to partner with suppliers that align to their own ESG strategies. This pressure is coming from all angles, including the general public and government.
I’m proud to say that as the first green parts supplier in our industry to provide recorded CO2 savings at a part level, we help support the decarbonisation of the claims supply chain.
As we head into the remaining half of 2023, we have the power to change the landscape, but we can only do this by working together.Tweet
Motor Claims News