The cost of motor repairs could rise as they can only be purchased in Euros or Dollars
As uncertainty over the UK’s departure from the European Union continues, Allianz Insurance’s chief claims officer had told Insurance Times it continues to impact costs.
Graham Gibson said that the underwriter has already been working with its brokers to highlight the pressure that the impact of Brexit has had on the value of Sterling and with it the rise in the costs of claims.
A key example is that of the cost of motor repairs with the increase in price of parts and paint due to the fact they can only be bought in Euros or Dollars.
Price of parts
He explained: “To give a little more context, paint and parts across the world is traded in Dollars and Euros only, so any financial change has an impact. Historically this hasn’t been significant, but with the Euro dropping from 1.40 to as low as 1.08, as a result of uncertainty around ‘Brexit’ negotiations, this has produced a 23% inflation purely as a result of GBPs fluctuation.
“It is very noticeable on paint/parts due to the short call period (it impacts almost immediately) but the same principle exists for anything else we import to deal with our customers claims, for example building materials, brown & white goods etc.”
It is not simply restricted to the motor claims explained Gibson.
“As mentioned previously, this will have an impact on anything we import,” he said. “However, in addition we are seeing the very early signs of labour inflation as the market anticipates some of the free movement of labour issues.”
Premium pressure
He warned that it was inevitable that this will put pressure on premiums.
“In many ways insurance is a simple business and if claims cost go up, unfortunately this gets passed onto customers,” added Gibson.
As such Allianz has and is talking to its broker partners in an effort to highlight the issue and manage expectations.
“Allianz has already taken a proactive approach on this, using our Claims Brokers Strategic Partner Forums as an opportunity for our experts to share this information in detail so that our Broker partners have the information required to inform our customer,” explained Gibson.
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