Crash tests Shipping delays, rising prices, labour and parts shortages are just some of the factors challenging motor repairers – and insurers By Wendy Pugh
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f you own a Chevrolet in Australia, at some time you’re going to need to buy spare parts from the United States. That can be an expensive proposition for insurers right now, as global shipping slows down and containers pile up in ports. A Chevrolet owner complained to the financial umpire after shipment delays held up repairs for months. His case has reflected carmaker, repairer, insurer and driver frustrations over supply disruptions. The Australian Financial Complaints Authority found in favour of the Chevrolet driver on some elements in the dispute, while accepting the delays were not the insurer’s fault given the needed parts hadn’t arrived from the US. Ultimately, the insurer was ordered to pay $4410 for 49 days’ car hire and $2500 compensation and was criticised for not proactively keeping the policyholder informed on progress and for not following up with the repairer. Covid-triggered supply chain frictions are delaying vehicle and part deliveries, elevating freight charges, fuelling used car prices and increasing rental costs. Closed borders have also worsened skilled labour shortages.
24 insuranceNEWS
February/March 2022
Crash repairer AMA Group, which works closely with the insurance industry, is among firms seeing the impacts as covid variants have emerged and disruptions have rolled on. “There are lots of pressures all the way through the repair life cycle chain and these things are resulting in increased costs of working and increased costs of parts,” AMA Group Chief Commercial Officer Andrew Mair tells Insurance News. “Ultimately, the average cost of claims will increase and that will then flow through to insureds in terms of increased premiums.” Reporting by insurers suggests this is already the case amid efforts to mitigate some of the impacts caused by a plethora of inter-connected problems. A shortage of microprocessors – an essential item for the increasingly sophisticated systems on modern cars – has particularly delayed new car deliveries, adding to other logistical issues slowing production. Australia, a relatively small market and far from Northern Hemisphere manufacturers and the most lucrative trade routes, must compete for scarce shipping capacity and limited supplies of all sorts of automotive goods. After arriving in local waters, vessels can then
