Some timely thoughts on van insurance for you;
The head of a credit hire company that provides specialist replacement commercial vehicles has warned that a perfect storm is emerging for the van insurance market. Jodi Daubney, managing director of Magna Accident Services, which provides mobility for commercial customers while their vehicles are off the road following an accident, said Brexit, Covid and the soaring home delivery sector have made new and replacement vans “as rare as hen’s teeth, risking huge claims bills for van insurers, which will inevitably feed through to higher premiums.”
Jodi explained that two factors have combined to create a serious problem:
· Overall van sales rose to nearly 100,000 in Q1 2021, according to the SMMT. During the same period, the light commercial van market grew by 43% compared to last year. Pickups and larger vans grew by 36% and 60% respectively.
· UK commercial van manufacturing for the domestic market fell by nearly 33% in the first two months of 2021 (compared to 2020), reflecting the difficulty in getting parts from the EU, and changes required to the just-in-time manufacturing processes following Brexit.
“There is increased demand, but falling supply is leading to long lead in times for a new vehicle,” she said, adding: “If you have an accident and your van is written off or needs repairing, you’re in trouble.”
Jodi said that, typically, commercial vehicles are written off following an RTA if repair costs are in excess of 60% of the vehicle’s value, and the rising cost of parts makes it more likely that vehicle repair costs will hit that threshold.
She noted: “With waiting times for new vans extending to January 2022 for some models, insurers will be dealing with very unhappy customers if they won’t build in extended hire periods while customers wait for a new van to arrive.”
Jodi added: ““As a GTA subscriber there is a limited time we can leave a client in a replacement vehicle after they have received their total loss cheque. We will not be paid for any hire period which cannot be justified.”
The GTA is a voluntary protocol between insurers and credit hire companies that aims to remove friction and delays in settling credit hire claims, but Jodi said that all credit hire companies providing commercial mobility, regardless of whether they are subscribers to the GTA or not, may need to agree with insurers to extend the time period.
GREEN PARTS SHOULD BE DEFAULT SETTING FOR MANY REPAIRS
She called on the industry to explore how using green or used parts to repair vans could reduce the backlog, even temporarily while waiting for new parts. “In the meantime, we are scouring the country to find replacement vans for our customers,” she said.
“The customer is entitled by law to be put back in the position they were prior to the incident, and if a new vehicle is not available to them then this is going to cause issues.”
“We are also finding that more commercial customers are buying ‘new for old’ policies, which means that if their vehicle is written off during the first two years then they are provided with a new like for like vehicle. Tradespeople buy particular van models because they need to be appropriate for the type of work they do, including the interior fit out.”
She said that insurers and specialist credit hire companies like Magna needed to work together to ensure that customers don’t lose out while they wait for a new vehicle. It is also vital to reduce the risk of friction, which would be bad news for the whole industry.
“For hundreds of thousands of tradespeople, their van is their livelihood, and the last thing we want is for them to be unable to carry on with their business because they can’t access mobility.”
Jodi warned that some customers could continue to drive their damaged vehicles, with a risk to them and other road users. “If customers worry that they won’t have an adequate replacement while their own van is being repaired (and in the bodyshop for a long time waiting for parts).”
“Millions of small businesses will be emerging from the pandemic desperate to get back to work, and their mobility will be essential. If drivers are involved in an RTA, they may have to choose between using a damaged vehicle or being off the road because they can’t access a replacement. That is a serious risk for the public.”
She called on the industry to explore how using green or used parts to repair vans could reduce the backlog, even temporarily while waiting for new parts, or that the issue could be raised through the GTA. “In the meantime, we are scouring the country to find replacement vans for our customers,” she said.
According to Consumer Intelligence, van insurance rose by 2.3% during the second half of 2020, but premiums may rise further if this issue is not resolved.
Jodi said: “Nobody wants to overpay for their van insurance, especially in a pandemic-hit economy, but I am waving a red flag now and urging the industry to work together to keep a lid on premiums.”