Chennai: Labour shortage and gaps in spare parts availability due to supply chain issues resulted in delays in settling motor insurance claims, particularly for repairs. Time taken to settle claims went up from an average of 3-4 days to 15-20 days between June and September.
Bajaj Allianz General Insurance business head (motor) Aditya Sharma said, “Such delays are mostly seen among large-value motor claims, where vehicle owners decide to repaint or change vehicle parts after not using the car for many months due to lockdown. Even the cost of labour and paint has gone up by 7%-8% since June and the average size of motor claims increased by 5%-10%. Besides, delayed supply of vehicle parts, further delay seen in the logistics segment too.”
Chennai-based auto component maker, which produces sheet metal pressing, Sri Hari Industries’s MD & CEO VN Sujeesh said, “We have seen a huge demand for sheet metal pressing since August, as it is used in the production of transmission, brake, suspension and many more vehicle parts. However, there is a supply gap caused by various reasons, from shortage of supervisory staff and semi-skilled labourers, increase in cost of raw material by 10%-12%. It is not easy to go for new recruits as that would mean an additional cost for training them.”
ICICI Lombard General Insurance also has seen a delay in settling motor insurance claims due to supply chain disruptions faced by OEMs (original equipment manufacturers), component makers and auto sub-system assemblers. ICICI Lombard head of underwriting, claims & reinsurance Sanjay Datta said “Most claims settlements for private cars are cashless, and don’t see why there should be a delay. However, there has been delay in repair of vehicles due to lack of labour. Hence, the repair time has increased and caused a 10%-15% delay in settling claims compared to pre-Covid time.”
Insurers say motor insurance claims applications coming in have reached to pre-Covid levels of 100% in September. ICICI Lombard said it settles over 1 lakh motor insurance claims a year.