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Labour shortages: A driver of motor claims inflation

In recent years, the insurance industry has been heavily impacted by claims inflation and motor insurance is no exception to this. In 2021, motor claims pay out inflation increased by more than six percent, taking the average cost per claim to £5,3491.

One of the key reasons for this is a shortage of labour. There’s a combination of factors which have led to a “skills crisis” in the UK automotive industry which include:

  • Decreased EU immigration
  • The rising cost of living
  • An aging population
  • Long-term effects of the global pandemic

These factors have contributed   to a shortage of specialist labour needed to work with advanced vehicle technology parts and electric vehicles. Only 6.5 percent of the current motor mechanic workforce is qualified to service electric vehicles– which could pose a serious issue if the market for electric vehicles continues to grow.

The Institute of the Motor Industry (IMI) is predicting that by 2031, 160,000 vacancies in the sector will need to be filled3.

How does this impact my insurance?

The shortages in labour are contributing to both claims inflation and longer lead times for repair which ultimately has an impact on claims settlements.

If you have any questions about your existing policy with us, call your Aston Lark representative. Alternatively, to discover how we may be able to help you, contact one of our specialist teams:

Motor Trade Team on 03300 084 960 or arrange a call back

Classic Motor Trade Team on 01252 377 546 or arrange a call back

Self Drive Hire Team on 01252 377 546 or arrange a call back