Why have insurance costs soared?

Photo by Michael Jin on Unsplash

This news item on vehicle insurance provides some reasons why costs have risen dramatically during the past two years. Cornmarket is an insurance broker and recommended by IAMRoadsmart.

The Reasons

• On average there has been a 58% increase in vehicle insurance with younger and older drivers being more affected.
• Supply chain issues with new cars needing 30,000 parts from 200 countries.
• Extended repair times meant that courtesy cars and hire car costs soar as time period has extended.
• Production of new cars was low during Covid so there were fewer cars available as courtesy cars.
• Significant events such Brexit, Ukraine war and Covjd were seen as major influences.
• Advances ln Technology with significantly more driver aid technology in new cars.
• Dashboards and rear bumpers now contain large amounts of electronics.
• Semi-conductors are used in many Items including Mobile phones and computers, These were in short supply so extended waiting times.
• Neon gas used in the supply of chips affected by Ukraine war. Ukraine supplies 50% of neon for the world. Worldwide 40% of the Krypton used in manufacturing semi-conductors is from Ukraine.
• Brexit has caused a shortage of skilled workers as many left the car industry and left the UK.
• During Covid, many garage staff left and have not returned to work in the motor industry. Older employees retired, probably earlier due to Covid.
• Energy and Fuel Costs have increased causing an increase in the cost of parts and components.
• An increase in vehicle theft and insurance fraud
• Personal Injury claims need investment to cover long term personal and injury claims are higher. Investments have poorer returns.
• The cost of long-term care which is paid from personal injury claims has risen.
•  The political tensions in China and Taiwan, where the majority of semi-conductors are produced along with the Ukraine war.