According to the latest claims benchmarking data from Willis Towers Watson (WTW), published this week, the average motor claim now stands at £5,380.

The research showed that motor claim volumes were low during the Covid-19 pandemic, but the cost of these claims rose. A key factor behind this surge is cyclist accidents.

“Understanding this change in mix of claims types during the lockdowns is important because, whilst overall accident frequency was down, an increase in the proportion of higher-severity claim types, like accidents with cyclists, has been a key driver behind the latest increase in average claims cost,” said Tom Helm, WTW's head of claims consulting.

“It also means we cannot solely rely on assumptions and patterns of the past to forecast future claims outcomes. Tracking whether this mix fully readjusts in the second half of 2021, as driving levels return to 90% of pre-pandemic levels, will be vital."

Insurance Times Dec 15th 2021

The data shows that accidental damage claims have increased at the fastest rate over the last 18 months, with claims inflation rising by 8.2% during first half of 2021, and by 8.4% in 2020.

“With inflationary pressures expected to intensify further due to rising used car prices impacting total loss settlement costs, the impact of the whiplash reforms should be closely monitored for early signs of the measures’ ability at least partially to offset this rise in vehicle damage costs.

“Add into the mix the fact that there will be increased volatility of motor premiums in the New Year owing to Financial Conduct Authority pricing reforms and that remote working continues to impact claims patterns, the trading environment will remain fraught with uncertainties for insurers.

“Increasing customer expectations, spurred by the rise of digital-first competitors, continue to disrupt the market, which means efficiency and improving claims handling accuracy will prove decisive in such conditions.”

Tom Helm Head of Claims Consulting WTW quoted in The Actuary 15th Dec 2021