Why repairing vehicles is costing insurers

Published: February 21, 2018

Updated: July 24, 2018

Author: Luke Jones



Vehicle technology has grown significantly over the last ten years, but it seems innovation comes at a cost of the rising price of collision repairs. Mitchell International has warned insurance companies that fixing an entire vehicle instead of a single component is driving up costs.

Speaking to Canadian Underwriter, Jerry Gastineau of Mitchell’s editorial team said a single component, like a sensor, does not mean the repair time should take longer and cost more. Sensors account for just a part of a vehicle’s safety protection.

“The systems are designed to work with multiple components together as a system, so if you’re replacing a sensor, that’s straightforward,” Gastineau said. “But once that’s done, I need to address the whole safety system of which that sensor is a part – that whole ecosphere.”

Repairing a vehicle to a level where it is safe is a challenge as the cost moves beyond just fixing a sensor. “Because you are now doing that operation, you now need to recalibrate and set the system to its full safe operating condition,” Gastineau said. “That can be straightforward, or it could be complicated. It could involve complicated drive cycles where the system had to re-evaluate and learn to interpret the system’s data from [everything] all together.”

Diagnostics, calibration, and other procedures cost time and ultimately increase costs on insurers as they are forced to continue to cover customers with rental cars. Intact Insurance, the largest auto coverage provider in Canada, said earlier this month the frequency of collisions and the cost of repairs has driven its poor previous quarter in auto.

“Cost pressures related to physical damage are more recent and have accelerated in the last few quarters,” Intact Financial Corporation’s CEO, Charles Brindamour, said on February 7. “That is why we have meaningful rate increases in the pipeline across the country.”