Decline in Accident Repair Firms Threatens Insurance Delays
The Press Assocaition reports that the number of car body repair workshops has declined by 32% in the past 10 years and it’s predicted numbers will drop by a further 9% by 2020. This means there will be 3020 body repair firms left in the UK by the end of this decade and could leave drivers frustrated by the length of time it takes to get their cars fixed.
Trend Tracker, an independent research company, says this will cause a delay in cars being fixed after an insurance claim. The problem is being compounded by more cars being involved in collisions, with an expected 2% rise in claims and repairs by 2020.
Insurance companies finance 70% of all body repair work carried out in the UK, but many car body repair firms say there is little profit in carrying out insurance work and many have now closed.
The average cost of an insurance-paid body work repair in the UK costs £1380, yet the body repair company will typically earn on £13.52 in profit for a job that takes 15.7 hours to complete.
Robert MacNab, lead analyst at Trend Tracker, commented: ‘As recently as 2004 there was a repair capacity excess of nearly 50%. Insurers were spoilt for choice in terms of who to give work to and could dictate terms. The increasing repair capacity deficit will put quality bodyshops in a much stronger position to secure a better deal from insurers.
‘We will see more repairers renegotiating or simply rejecting the least profitable insurance contracts, particularly where there is an open-ended obligation for them to provide courtesy cars at their own expense. The hourly labour rate is also likely to rise, further denting insurers’ profits.’
McNab also said that insurance companies may not be in a position to pass on this added cost to customers due to the competition for drivers’ business.