Blog: Reclaimed parts - reimagining the motor claims of the future

What do reclaimed parts and a three legged stool have in common? Before answering that question, let’s consider the backdrop – why is it that recycling as a concept is becoming the norm, but not in the motor claims process?  There is an EU target for the UK to recycle 50% of household waste by 2020 and in March 2020, WRAP’s annual Recycling Tracker reported that 87% of UK households ‘regularly’ recycle.  Back in October 2019, research found the majority of motorists (69%) would choose the option of a reclaimed part to repair their vehicle with protecting the environment given as the main reason (77%). The ‘Attenborough’ effect is very evident. So, as an industry, are we giving the customer what they want and if not, why not? 

Back to the three-legged stool. Picture the legs of the stool as three parties integral to successful delivery of a reclaimed parts model in the claims process – insurer, recycler and repairer. Cohesion, collaboration, and consistency is needed between all three, plus a commitment to educate consumers and promote the benefits of reclaimed parts. 

Individually, progress is being made.

Insurers

Most insurers currently using reclaimed parts do so when it is not economically viable to repair the vehicle otherwise. In other words, offering their policyholder a choice, to avoid a total loss. However, the pressure for an insurer to make an instant decision [to repair or write-off] brings inflexibility. Many insurers have a designated total loss team and a separate team handling repairs; each team having different objectives and processes. Reclaimed parts are not built into the process from the start, only considered once a vehicle has been identified as a total loss and passed to the total loss team.  Retrieving that claim and moving it back to the repair team by judicious use of reclaimed parts can be a fractious process. 

Recyclers 

The key criteria for reclaimed parts can be categorised as safety, availability, quality, provenance, delivery and cost. Recycler’s continue to make strong progress across all areas, responding to market needs and building a reputation for quality. Profit margins on reclaimed parts are tight and it is not in the recycler’s interest to have orders returned; this has driven significant investment in process and quality assurance. To improve buyer confidence, a new industry standard has been introduced this September and the market has welcomed the Vehicle Recycling Association Certification Scheme, to drive professionalism.     

Repairers

Repairers’ confidence in reclaimed parts is growing, accelerated by increased usage due to customer demand and delays in new parts supply. The 2020 ABP State of the UK Body Repair Industry Report published in October revealed that usage of reclaimed parts by repairers has increased from 54% of survey respondents last year to 74% this year.  The same report also showed increased consumer confidence with 84% of cases when reclaimed parts were used being at the request of the policyholder, to avoid a total loss. 

For the market to mature, further cohesion is required. A simple but effective tactic would be for all parties to define ‘reclaimed parts’. Many descriptions are used including reclaimed, recycled and green parts, and the understanding of what these terms mean can be fractured. Reclaimed parts are original equipment manufacturer parts harvested from end of life and salvage vehicles. 

Currently, the policyholder must opt-in to have reclaimed parts used in their vehicle repair. What if that changed, so that the policyholder had full knowledge to opt-out if they didn’t want reclaimed parts to be used?  The choice remains but the emphasis is modified and the sustainable option doesn’t appear to be a compromise but the standard approach. 

All three parties can demonstrate relevance to societal attitudes on sustainability by positively promoting the industry’s reclaimed parts option. Reclaimed parts can play an effective role in reimagining and realising the motor claims of the future – offering consumer choice, reducing costs and protecting the planet. 

We will be debating building a more sustainable future for motor claims with insurers and repairers on 18 November at 11am. To register for what promises to be a lively webinar please follow this link.

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