Dealers are having to dig deeper into their policies, with premiums expanding by as much as 40% on average. We take a look at why they’re struggling more and more.
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Car dealers in the UK are facing higher insurance premiums than ever before as a result of a huge increase in premium collection, as well as an increased number of misrepresentations in claims and policy details.
While non-professional consumers have noted that premiums have increased on average by more than 48% since 2021, premium increases in the auto industry have sometimes been smaller; however, they have still noticed a 40% increase.
According to the Utility Saving Expert comparison, the average existing car insurance premium in the UK charges £776 at the end of 2023, up from £554 in 2022.
Many traders, especially those in high-risk areas, pay much higher premiums than these, and some insurers even refuse to offer policies for auto trading in “black spot” areas, such as those where “cash-for-accidents” scams take place. prevalent. common.
“Because of claims about twists and turns, it’s difficult to get competitive quotes in certain areas,” said Michael Peacock, sales manager at market broker Jensten Motor Trade.
“Some examples of zip codes include B25, B34, B8, BD7, and BD3. Unfortunately, car dealers in those communities find it difficult to manage insurance costs.
Another explanation for why stores have to pay more to insure their stock is the sharp increase in the price of cars and maintenance costs in the event of damage.
Grant Richards, an auto trading and fraud adjustment specialist who works for a claims control company in the Midlands, said: “Something we’ve noticed a lot in recent years and indeed since used car costs went up during the pandemic. “is that the price of claims has skyrocketed.
“Cars are more expensive than before and so are accidents. When they are cancelled, insurers pay in lieu of a higher valuation.
But despite the increase in the value of cars, the number of cars depreciated per year is still higher than ever: only about 400,000 cars (or 1 in 83 cars) are depreciated per year.
“It’s the newer, more expensive cars that have the biggest impact, and many of them require effective charging to repair because they charge a lot more to get portions, particularly for electric systems and cars with battery-electric powertrains,” Richards said. .
“The fact is that the cost of claims, whether cancelled or repaired, has increased. Insurers work on the basis of actuarial risk and take into account their profit margins. So, it’s no surprise that those extra costs are absorbed by the customer.
Richards also noted that several auto insurers are now finding it very difficult to obtain proof of transactions following an increase in the number of “ghost brokers. “
“People take out a car insurance policy and then use it to install cars in it so that they appear in the Auto Insurance Database (MID), and some even go so far as to act as fake agents.
“It’s a developing problem, so don’t be surprised if your insurer needs to see evidence of selling or operating in the industry before offering you terms. “
Rob Creedon, Managing Director of Jensten Motor Trade, said: “Once ghost agents are discovered, policies and MID are cancelled, which can also result in the expulsion of clients from the MID and the arrest of Americans by the police. “
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