Capacity problems will lead to 'premier league'

The recent Post Magazine Management Briefing, New Roads for Motor Claims, revealed the changing nature of the motor claims sector. Marcus Alcock and David Worsfold report

Accident damage costs are likely to increase over the next 12 months as capacity problems once again beset the motor repair industry, according to Eddie Longworth, managing director of Longworth Consulting.

"Insurers have been in a position of power for some time. They have had it relatively easy ... but this situation will change," he warned.

Mr Longworth recognised that insurers have themselves become more efficient and productive at a time when bodyshops have had to contend with margins in the 3%-5% range. But he suggested that a dip in the claims rate experienced during the past nine months has upset the stability of the sector.

"Insurers will have to change the way they deal with suppliers as we enter an abnormal market," he added, predicting a significant stratification of suppliers.

Mr Longworth suggested there will be a premier league of repair providers of some 60-70 firms that all insurers will be chasing, representing only £250m of a total capacity of £5bn.

He warned: "That premier league is going to be less than is needed."

Mr Longworth said he expected that more insurers will seek to own bodyshops, form joint ventures or engage in solus relationships as a means to address the changing market dynamic.

He said that in 10 years' time there will be 5000 bodyshops and they will be structured very differently, with much greater degrees of specialisation on offer.

"Who the winners and losers will be I simply don't know," he explained, indicating it might be 'payback time' for the big players that have upset people in the past.

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