ESTONIA: Motor Hull price increases driven by the rising claim frequency reaching pre-pandemic levels

26 October 2022 — Marina MAGNAVAL
Motor Hull prices are on the rise, according to insurance providers, in addition to general inflation, the increase in claims is behind this rise, reaching pre-pandemic levels, reports.

"Inevitably, the inflation that is happening all around also affects insurance prices", says Kaido Naarits, head of the vehicle insurance portfolio of ERGO insurance.

According to him, to understand the current price increase, one should look at the time before the pandemic. The restrictions reduced frequency of traffic and damage. Therefore, insurance providers also reduced prices by 20-30% in the first half of 2020. "It was possible to keep this price level until the beginning of this year", said Naarits. "Today's price level has moved back to the level of early 2020 due to recovered traffic and claim frequency and increased payouts", he added.

"The number of insurance events is also important - in 2019 this number was 36,134, in 2020 - 29,746 and last year 35,892," says Swedbank's head of risk insurance, Aleksei Zemkov.

In addition to recovery of the loss frequency, the insurance prices are also affected by rapid inflation. This increases costs of both vehicle repair and insurance claims services. In the case of the latter, for example, costs for replacement cars have increased. "While the cost of replacement cars increases, the supply problems of spare parts also have an effect", said Naarits. For example, with seemingly simple repairs, situations have arisen where a spare part has to be waited for weeks, so a replacement car has to be used throughout the waiting period.

According to Raivo Piibori, head of Coop Pang's Insurance Agency, wage pressure will also lead to price increases.

According to Claude Kaasik, head of the vehicle insurance group at PZU, over the past year, compensations for both traffic and comprehensive insurance events have increased by an average of 20-25%. The fact that more and more technology is used in modern cars also increases repair costs. "This, in turn, also affects insurance premiums. This is only one component in formation of the insurance prices" said Kaasik. "Time will tell how prices will move in the future, and it is not possible to make predictions at this point", he added.

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