Rising Claims Costs in the Insurance Industry
Over recent years, the insurance industry has seen a significant rise in claims costs, meaning that policyholders’ claims are becoming more expensive for insurers to settle. This increase is driven by a variety of factors, including the rising cost of living and shortages of workers across key sectors of the claims process. The result is a longer, more expensive claims journey — with insurers ultimately facing higher outlays.
What Does This Mean for Policyholders?
As insurers face higher settlement costs, they must recoup their losses by increasing premiums. This makes purchasing insurance more expensive for businesses and individuals alike.
AXA Insurance recently released a report outlining the reasons behind rising claims costs and the steps being taken to address them. Their findings echo what we at Talbot Jones Ltd have observed when assisting clients with liability claims. The report also highlights practical steps policyholders can take to protect themselves.
Why Are Claims Costs Increasing?
Cost-of-living inflation is driving up everyday expenses.
Covid and Brexit impacts have created supply chain delays, making parts harder to source and more expensive.
Medical delays mean longer waits for assessments, increasing the risk of conditions worsening and medical costs escalating.
Labour and material price increases are inflating settlement values.
Company insolvencies in the current economic climate are leading to more liability claims against professional advisers.
Fraudulent claims tend to rise during economic downturns, adding to investigation costs even when claims are unsuccessful.
How the Insurance Industry Is Responding
To tackle these challenges, insurers are:
Using virtual assessments (via photos and videos) to reduce inspection costs.
Improving fraud detection training.
Offering legal advice through add-on policies such as legal expenses cover.
Leveraging their own supplier networks to reduce repair costs.
Providing surveyors to assess health and safety proactively, reducing the risk of future incidents.
How Customers Can Protect Themselves
As a policyholder, you can help reduce your exposure to claims and manage costs by:
Managing risks effectively to avoid incidents in the first place, with thorough risk assessments for hazardous activities.
Having written procedures for dealing with incidents to minimise further damage.
Staying up to date with Health & Safety Executive (HSE) regulations.
Working closely with your broker to identify any potential gaps in cover. When in doubt, provide more information rather than less.
How Talbot Jones Can Help
At Talbot Jones Ltd, we are passionate about proactive risk management. Our team is here to help you protect yourself and reduce the likelihood and severity of claims.
For personalised advice, please contact our Claims Manager on 0191 731 6383 or email miranda@talbotjones.co.uk.
About Talbot Jones
Talbot Jones Ltd is a family-run Chartered Insurance Broker specialising in Third Sector and Professional risks. We provide free insurance advice, reviews, and quotations.
We also incorporate March Insurance Services, a Chartered Insurance Broker specialising in Agricultural and Hospitality Risks.
