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Blog: Motor repairs - how are insurers responding to consumer behaviour?

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When it comes to motor insurance offering the consumer choice brings a host of benefits and overall improves customer satisfaction. Mia Constable, head of business development at E2E Total Loss Vehicle Management, asks how can consumers be offered more choice and a product made more relevant, while reducing claim life cycle and costs and protecting the environment?

mia constable
Mia Constable, head of business development at E2E Total Loss Vehicle Management

It is fair to say although insurance plays a part in so many areas of day-to-day life, it often struggles to achieve associated relevance with consumers’ lives. Motor insurance is especially affected being required by law, which can give the product a grudge purchase status. Consequently, motor insurance consumers typically buy on price and insurers struggle with customer loyalty.

The Attenborough and Thunberg effect has seen the consumer become increasingly educated about environmental threats to the planet and this has begun to influence consumer buying behaviour. According to a report from Deloitte, ‘How Consumer Behaviour is Embracing Sustainability’, consumer trends in 2020 suggest that concerned consumers are adopting a raft of different measures to shop and live more sustainably. The report shows 43% are actively choosing brands due to their environmental value and 66% have reduced their use of single use plastics. Closer to home, the Auto Body Professionals State of the Industry Report released in October 2020 revealed that 84% of body shops fitting reclaimed parts as part of a vehicle repair did so to avoid a total loss, at the request of the policyholder.

Reclaimed parts can provide motor insurers the opportunity to differentiate their offering and their brand by marketing their product aligned to green consumer behaviour and sustainability. Clarity and transparency around how and when reclaimed parts form part of the process is critical to brand credibility and trust. Insurers adopting a reclaimed parts strategy can demonstrate that they are listening and responding to their customers by providing sustainable options. And importantly, they are able to introduce greater consumer choice, reflected in the premium price at the point of sale and at the point of a claim in repair options. 

The cost of new original equipment manufacturer parts can make a crash damaged vehicle uneconomical to repair and render it a total loss. [Typically, over 20% of motor claims result in a total loss.] The option to use reclaimed parts, if available and selected by the customer either via policy cover terms at point of sale or dynamically at point of claim, can reduce the cost of those repairs and make the difference to the customer retaining their vehicle and the insurer retaining their customer. How many insurers are exploring the possibility of offering the customer the option to offset their excess or discount their premium by signing up to reclaimed parts at policy inception?  Reclaimed parts present the opportunity to add tangible value to the customer relationship, increase customer satisfaction and remove the friction associated with a total loss claim.

Leading insurers already using reclaimed parts as an option to avoid total loss claims have found customers to be very receptive. So much so that some have already applied the strategy to their entire motor book of business, not just border line total loss claims. Reclaimed parts have realised supply chain benefits by plugging gaps in part stocks and overcoming delays in distribution, linked to the pandemic and Brexit. Recyclers have responded to growing demand by building bigger parts warehouses and investing in technology platforms, making ordering simple and delivery rapid. The success can be measured by multiple metrics: improved customer engagement and satisfaction; reduced claims life cycle; reduced repair costs; reduced credit hire costs; improved carbon footprint and improved insurer brand reputation.    

Historical myths around reclaimed parts being unsafe and generating a black market in stolen parts have previously been a cause for consumer concern.  Continued education around the quality and safety of parts is a priority for vehicle recyclers together with promotion of the Vehicle Recyclers’ Association Certification Scheme to assist consumer confidence. Insurers can work with vehicle recyclers and their own repairer networks to reinforce customer confidence and make the process of using reclaimed parts across the supply chain seamless. 

When selling a service, the ability to give the consumer choice cannot be underestimated. Often, the ability to offer choice comes with drawbacks for the service provider. With reclaimed parts, offering the consumer choice, reduces costs, improves satisfaction and protects the planet – so what’s stopping this from happening? 

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