Insurance-related repair costs rise by over a third

The last decade has seen a 20% decline in the number of car body shops, contributing to an increase in repair costs.

A new report from independent research firm Trend Tracker shows that the number of accident repair centres in the UK has fallen from 3,950 in 2008 to 3,162 in 2018.

Predicting a further decline over the next five years, Trend Tracker said that insurance companies and claims solutions providers need to work with their supply chain to secure repair capacity.

"It's inevitable that repair costs will continue to rise but we believe that insurers need to act responsibly and focus their attention more on securing quality repair capacity for the safe repair of a vehicle and to provide the customer service aspects of a motor claim," said Mark Bull, director of Trend Tracker.

Insurance-related repair costs have risen by 33.5% since 2013 and the report predicts a further increase of 14% of the next five years.

"We've taken a somewhat conservative view," Bull explained. "Given the above-inflation increase that has taken effect over the past five years, we believe that 14% is a conservative uplift that may well be exceeded. However, such above-inflationary repair cost pressures cannot continue at current rates, despite parts pricing and paint price increases, as accident damaged cars may become subject to becoming economic write-offs if the repair cost becomes too great."

The cost of parts alone on insurance-related repairs has risen by 40% in the past five years, with many cars now equipped with a range of advanced technologies. What's more, these often require technical repairs and calibration following an accident -- presenting a challenge to body shops facing a skills shortage, and adding pressure onto labour costs, Trend Tracker noted.

"This is why it's critical for insurers to work with their body repair partners as it's in everybody's interest for bodyshops to attract and retain high calibre staff, ensuring that an insurer's customer gets a safe repair," Bull concluded.