Hungary: MTPL average prices for passenger cars went up by 9% y-o-y in Q4 2020

17 February 2021 — Daniela GHETU
The National Bank of Hungary (MNB) recently launched a new index, showing the evolution of the annualized compulsory MTPL average premiums. Last year, the average MTPL price for passenger cars increased by 9% to HUF 44,523. MNB will update the index quarterly.

In comparison with Q1 2016, considered the base value, MTPL average fees have increased by 73%. About half of the increase can be attributed to the incorporation of the accident tax in the MTPL tariffs, in 2019 and the evolution of claims. Adjusted for these two effects, the Adjusted Index shows a 40% increase.

For the cars registered in Budapest, the average price increased by 15%, to HUF 63,200, as the area is considered of a higher risk. There is no increase of more than 10% for other categories of vehicle.

The change in premiums until 2019 was in line with the development of claims and taxes (i.e., the adjusted index was around 100 percent for 3-4 years). Last year, however, due to the epidemic - and in the wake of lower road traffic and less damage - scissors opened in favor of charges. This indicates that insurers view lower claims expenses due to curtailment restrictions as a one-off effect, while pricing increases in parts and service charges. The final impact of these will be assessed in the medium term, with the possibility of an index to be published quarterly in the future, the MBN commented.

The indicator for passenger cars, a category that accounts for 69% of the number of contracts in the MTPL market, is calculated on the basis of the data of the whole market and takes into account policyholders who switch insurers as well as new policies, and "smoothes out" the distorting effect of calendar anniversary contracts. (insurance policies are characterized by higher bonus levels and lower performance vehicles than the average for the whole market). The index indicates changes in premiums for cars for individual use (non-fleet), normal use and contract (i.e. non-taxi, indefinite insurance).

The MNB presents the latest data on a specially designed, easy-to-understand interface on its website. The KGFB index, to be published quarterly, indicates the change in the level of passenger car charges compared to the first quarter of 2016, and also provides information on the quarterly shift.

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