2022 Market Update – Motor

Substantial developments have occurred across the transport sector over the course of the COVID-19 pandemic. Freight and logistics services have seen unprecedented demand leading to a significant increase in Heavy Vehicle and delivery vehicle usage. The 2021NTARC report reveals a 55% increase in trucks on Australian roads since the pandemic began.

Recent data indicates that despite the increased use of logistics vehicles, the overall frequency of large loss crashes involving heavy motor vehicles has declined. There are a number of factors which may have contributed to this outcome including:

Less vehicles on our roads in general during lockdown periods which has seen multi vehicle incidents drop by more than 16%.

Improvements to safety standards throughout the motor industry.

Driver behaviour improvements in the key areas of speed, fatigue and drugs and alcohol.

Increase in cameras to monitor and report driving infringements.

Motor premium rates have remained relatively stable across the insurance market. Despite the drop in vehicle usage and ultimately fewer claims, we have not yet observed consistent premium reductions.

Factors preventing lower premiums include:

High values of motor vehicles, particularly within the 2nd hand market which is causing increases to Market Value claims.

Continued increases to most repair costs.

Volatile motor industry habits, more heavy motor, less every day light vehicles, significant increases in home delivery, more long distance domestic travel with international lockdowns, increase in ride share etc.

The direct insurance market is the most cost-effective channel to procure comprehensive motor cover for non-commercial, light vehicles.

Fleet pricing remains heavily focused on loss ratio performance and we don’t see this changing in the near future. Competition exists for fleets exceeding 50+ units that can illustrate a positive claims history.

Insurers will also look favourably on policyholders who invest in risk mitigation such as GPS tracking, fatigue management systems and facial recognition and behaviour tracking devices.