By: Luke Jones, Published on February 13, 2018 04:21 PM, Last Update on February 13, 2018 01:22 PM
Intact Insurance, the nation’s largest property and casualty insurer, is concerned about increasing collision repair costs. The company is coming off the back of an “unsatisfactory” performance in personal auto through its financial results.
In a release, the company said the main factors in underperforming auto numbers are new technology and expensive parts that are raising the cost of collision repairs. Intact Insurance recorded a combined ratio of 101.2% in personal auto for the quarter ending Dec. 31, 2017. The ratio was up 0.3 points from 100.9% during the same frame (Q4) in 2016.
“Physical damage inflation remains the main driver of our current under-performance [in the most recent quarter], but severe weather was also a factor,” Intact Financial Corporation CEO Charles Brindamour said in a conference call with investors on February 7. This was “largely driven by costs of repairs, largely driven by technology,” he said. “Parts are more costly, [and] the repairs are more complex and take more time.”
Brindamour says the company has a plan in place to reduce the effect of auto damage claims. The action plan includes “faster determination” to decide if a car is a total loss or can be repaired.
“A lot of costs in physical damage are outside the actual repairs,” including rentals and towing, Patrick Barbeau, Intact’s senior vice president of claims, said Feb. 7, 2018. “When you are able to be more efficient in the repair process itself, you save significant portions of the costs on the rentals.”
Bringing more specialist repair can also help improve efficiency and save money. “We see body shops getting more specialized in some types of repairs than others,” Barbeau said. “And when you can deploy to the front line clear indications of where to guide our clients to get their car repaired, depending on the model, depending on the type of accident, you get significant savings. That has evolved over time. A few years ago, body shops were more generalist.”
“Eighteen months ago, in the third quarter of 2016, the results in automobile insurance took a turn in a direction we didn’t like,” Brindamour said. “This was primarily driven by bodily injury as well as accident benefits. Part of it was reporting of larger claims from years 2013-14.”