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The Perfect Storm – the reasons behind increasing motor premiums and onerous terms

You may be wondering why your motor fleet insurance premiums are going up if you are not making claims or why insurers are asking for additional security or applying higher excesses; we know that this is not what our customers want to see but we thought it may help if we explain the reasons why insurers are doing this and how we may be able to assist.

The cause and issues facing insurers:

  • Stolen vehicle recovery rates are at an all time low plummeting to 28% in 2021, down from 80% in 2006.  Vehicle thefts in the UK are costing insurers around £1.5 billion per year.  To try to improve vehicle recovery rates, insurers are applying more onerous terms such as insisting that expensive theft-attractive vehicles are fitted with a Category 5 Thatcham approved tracking device.  Keyless car theft is at an all time high. Approximately 94% of vehicles recovered were stolen using keyless car theft techniques.  According to Whatcar, Range Rovers and Ford Fiestas are currently the most frequently stolen cars in the UK.
  • The situation in Ukraine is putting pressure on automotive supply chains, particularly around the supply of materials.
  • The global supply chains are experiencing delays caused by continued Covid-19 driven lockdowns in China leading to delays in importing.
  • The length of time taken to settle a claim is increased due to supply chain issues, meaning vehicles remain longer at the repairers. Added to this is the rising cost of courtesy vehicles, which increases the cost of the claim and again results in increased premiums.
  • It’s predicted that by 2025, 85% of all vehicles globally will be fitted with some type of Advanced Driving Assistance Programme (ADAS). As the technology in vehicles becomes more complex, the cost of repair and replacement similarly increases.  Advancement in vehicle technologies, such as ADAS, and hybrid/electric vehicles are pushing up the price of parts and also repairs which have become more complex and require specialist knowledge and training.
  • As more cars are fitted with driver assist technology, many require windscreen calibration to ensure that all cameras and sensors behind the rear view mirror are still working as required following a windscreen replacement. This requires specialist skills from a trained professional and comes at an increased cost, meaning vehicles fitted with this type of technology, such as Tesla, will more than likely have a higher excess and attract a higher premium.
  • With repair costs rising, there’s a growing chance that the cost of repair will outstrip the market value of the vehicle, making total loss settlements more likely.



A shortage of replacement parts and reduced workshop capacity, due to staff and skills shortages, is resulting in longer repair waiting times, which has a knock-on effect on the length of a claim. The average cycle time from First Notification of Loss (FNOL) to returning a customer’s vehicle has increased by 11 days.  Longer waiting times and a shortage of courtesy cars are driving up costs for credit hire and credit repair services.

  • As wholesale gas and energy supply is becoming a greater commodity, repair centres and manufacturers are impacted, with nine in ten reporting having to pass costs onto customers, further increasing inflation.
  • Increased incidence of theft is a concern, which is expected to continue during the cost-of-living crisis, with criminals stealing vehicles to order. In addition, the rising cost of materials and shortage of car parts means that car thieves can profit from stripping vehicles and selling the components.
  • Catalytic Converter theft in England, Northern Ireland and Wales rose 104% on average between 2019 and 2020. Criminals target Catalytic Converters because they are made from one or more of three precious metals: platinum, palladium and rhodium.
  • Electric Vehicle (EV) and plug-in hybrid charging cables have been cited as a likely area of rising theft as adoption of such vehicles increases. These cables contain copper and can be sold on to scrap metal dealers, meaning this type of vehicle may attract a higher insurance premium.
  • Motor Insurance Claim Fraud cost the industry around £577m in 2021.
  • Manufacturers are aware that certain marque vehicles are being targeted by professional gangs and are now fitting better protection systems to new vehicles. However, there are still a substantial number of theft-attractive second hand luxury cars, such as Range Rovers, that are vulnerable to relay attacks as well as hold ups. Customers should be mindful to always lock their doors and if you have a keyless entry vehicle consider investing in a key signal blocker.


If you are considering updating your fleet of vehicles, please discuss this with us in advance so you don’t encounter any nasty surprises in the way of increased premiums, higher excess or conditions that you were not expecting. You may have to have trackers fitted to vehicles if the manufacturers standard systems are inadequate for insurers requirements. We can discuss this with insurers in advance to find out what terms and premiums will apply and will look to assist you in any way that we can. Of course, we will shop around the market for you to try to find the best deal that meets your needs.

By Claire Thompson FCII Senior Commercial Account Handler & Chartered Insurance Broker

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