The new recommendations issued by KNF in July 2022 will replace the standard set in 2014. They might result in an increase of the compensations paid. As emphasized by analysts at Deloitte, among the factors that may determine a rise in repair costs there are:
- the increase in hourly labor costs in car repairs, especially in small towns, with little competition; as the recommendation provides, with little exception, for the prohibition of insurers from organizing repairs outside the local market, the labor cost factor will gain weight;
- Increase in the prices of parts in the cost estimate method, the recommendation prohibits the use of discounts applicable in repair shops and points of sale cooperating with the insurer; also, as victims will be entitled to use original parts for repair, regardless of the age or condition of the vehicles, that might add supplementary to the invoice-based repairs costs
- Reducing the number of settlements and increasing the costs of the small claims settlement process with low compensation amounts by complicating the settlement process.
"The nature of the insurance business is cyclical and full adjustment of prices to increased costs will take at least several quarters. Claim inflation will undoubtedly reduce margins on TPL ppm and will burden insurers' results in the next year," Marcin Warszewski, leader of the insurance analyst at Deloitte Poland opinionated in the article.
Read the full article, in Polish, here.