Rising insurance claims are set to push up the cost of car insurance, with one insurer warning that double digit increases will be on the cards
Figures from the Insurance Council of New Zealand show commercial and private motor insurance claims hit $1.023 billion in the year to September 2016 - up nearly $20 million on 2015. At the same time the loss ratio has risen from 69.5 per cent to 74.3 per cent.
John Lucas, a motor insurance expert at the Insurance Council, said increased crash numbers and higher repair prices were behind the increase.
"The motor vehicle insurance loss ratios have been increasing due to a combination of an increased frequency of crashes and higher prices to get repaired due to more late model cars with sensor technology being on the roads."
The council doesn't comment on premium increases but its figures show the gross premiums paid to insurers for vehicles has also been rising.
In 2016 it was $1.64b up from $1.56b in 2015.
Judith Harvey, national portfolio manager private motor at IAG - New Zealand's largest general insurer - said like other insurers it had experienced an increase in the number and cost of motor claims.
Harvey said greater urban migration and changes to New Zealand's vehicle fleet were behind the increases in claims.
"Migration into main cities from other areas in New Zealand and abroad has increased the concentration of cars in the main cities, especially Auckland.
"This has increased the number of claims. Higher traffic densities and prolonged exposure to that means a greater exposure to factors leading to damage."
Harvey said there was also a greater proportion of urban 4WD vehicles which not only caused more damage to other cars but parts were more expensive than a traditionally average vehicle.
At the same time new vehicles were making up a larger proportion of all vehicles assessed and this was impacting claim sizes because of expensive technology, use of modern repair techniques and new vehicle owners having a greater tendency to claim.
"These are positive changes to safety which are embraced by the insurance industry, and should eventually reduce the number of accidents.
"However, in the meantime, the new technology comes at a cost.
Harvey told Radio NZ that for some people would could mean double digit increases on their insurance premiums.
An AA Insurance spokeswoman said increasing costs were being reflected in its premiums but increases would be gradual.
"Current increasing claims costs - related to the rising cost of car repairs and the current shortage of skilled panel beaters in the industry - are reflected in our premiums.
"As these increases are gradual and incremental, customers will not see a large spike in premium costs."
Neil Pritchard, general manager of the Collision Repair Association, said the industry did have a skills shortage which was almost at "crisis levels".
The industry had put in a submission to the government asking that panel beaters be added to the skills shortage list for migrant workers.
"We are just not keeping up with demand right now."
But at the same time there had been an increase in the number of cars on the road, leading to greater congestion and a record number of new cars were being sold.
Around 150,000 new cars a year were being sold plus news models of second hand cars were also coming into the country.
"These vehicles do have a lot more collision avoidance technology." While that meant those vehicles would crash less often when they did it was expensive to fix. That was not because of the time involved in fixing the car but the higher cost of parts, he said.
Insurers already tailor premiums around which cars get stolen the most but Pritchard said they didn't reflect accident and repair costs.
Source: Driven
