A sharp rise in motor repair costs is partly due to higher energy, materials and labour costs, though a key and more permanent factor is the rapid advance in technology of modern motor vehicles, repair management firm AAMC says. 
 
Finity Consulting analysed more than 80,000 motor accident repairs processed by AAMC in the past two years. It found repair costs have risen at a much higher rate than consumer price inflation, challenging claims managers. 

Insurers can mitigate this cost by partnering with firms investing in the latest technologies and advanced equipment, it says. 

“This appears to be more of a structural move in repair costs that needs deeper consideration by those involved in the collision repair industry,” the analysis said.  

“Advances have led to new repair methods and equipment. There is currently a struggle to keep pace with the industry’s lag time in catching up with repair techniques.” 

The company says insurers should actively manage repair networks and stay informed , and should partner with “progressive” repairers prepared to invest in the latest methods. Engaging well-equipped and experienced repairers for specific vehicle types or damage severity, minimises unnecessary part replacements. 

Most prestige manufacturers offer specialised equipment and training to factory-approved repairers, allowing them to do most of the work in-house, which reduces costs. 

However, the report warns that factory-accredited motor body repairers generally operate at higher labour margins and “prefer replacing damaged parts over repairs due to their relationship with the manufacturer and dealers”.  

“Insurers need to manage this issue closely,” the report said. “It would be advantageous for insurers to continually identify and integrate new sublet specialists. This approach can help them avoid costly transportation and dealership expenses within their repair network strategies.”  

Similarly, ill-prepared repairers increase costs as “their only option is to replace with new parts.” 

"Ensuring that an adequately equipped and experienced repair is correctly engaged in the type of vehicles and severity of damage incurred is a key to maintaining a level of cost control.”  

AAMC says early intervention at the time of loss is critical, and allocating the most appropriate repair for the type of vehicle and damage sustained at the point of first notification of loss "cannot be underestimated”.  

"Insurers need to continually evolve their established repair and supplier networks in order to better mitigate rapidly rising repair costs,” it said.