The increasing likelihood of cars to have advanced safety features may be pushing up the cost of claims for motor insurers.
A report by Willis Towers Watson found that increased vehicle repair costs has inflated underwriting loss ratio for major players.
"Rising claims costs combined with falling premiums continued to take a toll on UK motor insurers' operating results in 2015," said the report.
"Modern cars are incorporating an increasing range of technological safety features that will have an impact on risk, perhaps also inflating repair costs in the process because of additional components and complexity."
The inflation of repair costs may mean that low speed incidents that might previously have resulted in only a dented bumper may now lead to costly repairs of equipment such as proximity sensors and reversing cameras.
The report suggests that such inflationary repair costs contributed to the net underwriting loss ratio in the private market increasing significantly from 82% in 2014 to 84.9% in 2015.
Brexit will only add to the problem of rising repair costs says the report.
"If anything, the Brexit vote is likely to put more sustained, pressure on more accurate and realistic underwriting and pricing, partly because many replacement parts are made overseas and priced in Euros or other currencies."
Introducing new customer-focused stratergies, utilising claims analytics and big data will be crucial areas for insurers to improve upon if they are to ensure the long-term health of the market.
"Claims analytics is an area in which we think there's considerable headroom for insurers to improve not just their claims performance, but also to feed insight into other aspects of their business, including pricing, underwriting and customer relationship management," said Stephen Jones, UK head of P&C pricing at Willis Towers Watson.
"Companies will need to be on the front foot when dealing with further changes and opportunities that technology will inevitably bring to business strategies and operations.
"While a growing number of insurers are repositioning themselves by partnering their experience and long-term mind-set with the creativity and agility of technology companies, the industry as a whole has some way to go before it can be said to have fully embraced this collaborative new economy."
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