The cost of hull insurance increases significantly. For example, small car owners who paid 264 euros for annual comprehensive car insurance last year received quotes this year starting at 328 euros, with most insurers asking for more than 360 euros.
Insurance companies confirm price increases. If Kindlustus comprehensive car insurance product manager Meelis Tara told ERR that repairs and spare parts have become more expensive, meaning it’s also more expensive to fix a vehicle in the event of damage.
“Unfortunately, this has had a knock-on effect on insurance premiums,” he said.
Kaido Naarits, Head of Vehicle Insurance Portfolio at ERGO, also said headline inflation would affect insurance rates. Additionally, the impact of the Covid pandemic is reflected in prices:
“The pandemic and administrative measures taken, such as movement restrictions, have reduced traffic flow and claim frequency, enabling us to reduce third-party and comprehensive insurance premiums by 20% to 30% in the first half of 2020, depending on the vehicle and the risk profile of its users,” he explained.
Naarits said insurance price levels had returned to levels seen in early 2020 as traffic and accident frequency also picked up and claims climbed.
Number of road accidents and total losses hit record highs
Citing figures from the Estonian Motor Insurance Agency (LKF), Meelis Tara said the number of traffic accidents hit a record high last year with more than 38,000. The loss of more than 80 million euros is also the largest ever.
Naarits went on to say that progressive inflation has skyrocketed the cost of repairing a vehicle and the cost of services related to insured events, such as towing a vehicle while it’s being repaired or renting a replacement vehicle.
The cost of replacing vehicles is rising due to the difficulty in obtaining the necessary spare parts.
Naarits used the ostensibly simple example of a repair, where replacement parts for a broken lamp had to be purchased and shipped, causing weeks of delays. During this period, the broken car is scrapped and the vehicle needs to be replaced.
Vehicle prices have also risen sharply. All of these factors can affect the cost of comprehensive and third-party auto insurance.
According to Claude Kaasik, vehicle insurance product manager at PZU Estonia, insurance claims have increased by more than 20%. He also cited inflation and an increase in the frequency of claims.
“Additionally, the increasing use of technology in modern vehicles has a significant impact on repair costs, which in turn affects insurance premiums. This is just one component of insurance premiums.
“We cannot predict future price volatility now; only time will tell,” Kaasik added.
If this year’s inflation estimates are accurate, we can expect slower price growth, Meelis Tara said.
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