Briefing: Now is a time of great opportunity on salvage for insurers and brokers

By Content Director Saxon East 

Now is a time of great opportunity in the salvage market.

A number of factors are coming together to make the market more attractive than ever for brokers and insurers. 

Jane Pocock, UK managing director of salvage and online vehicle auction firm Copart, tells me the current challenges surrounding the salvage market.

Tough time for repairers 

Firstly, the new car market has stalled amid chip shortages and Covid-19 keeping cars off the road.

The knock-on effect here is that these issues have created more demand in the used car market. That means prices are rising for salvage. 

Copart has a profit-sharing relationship with insurers and brokers. 

Secondly, firms are getting their act together on environmental, social and governance (ESG) factors. Insurers and brokers can help demonstrate their ESG credentials by using green or recycled parts for car repairs.

Green parts are salvaged vehicle pieces that can be reused - these are used instead of ordering a new part from the vehicle manufacturer. 

Thirdly, the quality and professionalism of repairers themselves is improving. This is due to digitalisation and a desire from repairers to fully utilise used parts amid their own challenged business models. The quality control of repairs is improving. 

This means insurers can feel even more assured when using green parts for repair. 

Sustainable profit

Pocock told me it has been a tough time for repairers of late. With margins being squeezed by business partners, such as insurers, they have had to consolidate. 

She added: ”Where we do have an opportunity is to be more environmentally friendly. The suppliers have to drive more coordination in how to put parts back into the insurance supply chain. Before, it was left for the independent repair market. Now it’s coming back into the insurance market.”

For brokers especially, they should be looking at the salvage market. With the FCA putting restrictions around new business and potentially reining in revenue from premium finance, revenue faces a hit. 

That will mean looking at all aspects of their business. From the way they do remote working and the cost of office space, to where they can maximise business opportunities within the existing market. 

Opportunities such as salvage are one of a number of ways they can, hopefully, sustain profitability.