A new study has revealed that car insurance companies are set to see a dent in profits as repair centres continue to shut up shop, giving insurers fewer opportunities to make money on repairs.
It has been reported that the number of body shops in Britain has fallen by a third since 2004 with numbers expected to plunge a further 9 per cent by 2020. Where a few years back we were seeing more and more body shops opening up we are now seeing the opposite with only the best, professional firms existing in the marketplace.
Robert Macnab, lead analyst at Trend Tracker, said: “As recently as 2004 there as a repair capacity excess of nearly 50 per cent. Insurers were spoilt choice in terms of who to give work to and could dictate terms.”
It seems that the industry is in a very different state at present with the remaining body shops now possessing the upper-hand, being in a much stronger bargaining position. Trend Tracker reckons this could be a lot more detrimental that we think, claiming insurers to have made a loss in 2014, with crashes costing them 109 per cent of the premium revenue they bring in.
A competitive marketplace means car insurers are unlikely to put up prices for customers, either: “Passing on these expenses may not be an option for insurers,” said Macnab.
Let us know your thoughts on this by leaving your comments below. Could this small change make a mark on the insurance industry indefinitely?