Why car insurance costs are rising – expert explains price increases and gives an outlook for 2024

Why car insurance costs are rising – expert explains price increases and gives an outlook for 2024

According to a report by www.fr.de,

Car insurance premiums rose sharply last year, and this trend is expected to continue in 2024. According to comparison portals such as Check24 and Verivox, tariffs have already increased by a double-digit percentage since last year, with contributions for liability, partial insurance and fully comprehensive insurance increasing by 13 percent. The rising cost of auto insurance could have a significant impact on the market, the consumer and the industry.

The increase in car insurance prices is due to several factors, including inflationary increases in repair costs, increased loss rates and the rising cost of replacement parts. In particular, the costs of spare parts have increased by more than twice the inflation rate in the last ten years, which has an impact on the combined ratio. This economic reality forces insurance companies to raise prices to cover costs.

Another factor that influences car insurance premiums are the new type class classifications, which, according to the German Insurance Association, will further influence car insurance premiums. A total of 13 million car owners have to adapt to a new classification, with the type classes becoming more expensive for 7.4 million vehicle owners and cheaper for 5.4 million.

The rising cost of auto insurance could place financial strain on consumers and increase competition among insurance providers. A price war could lead to a short-term reduction in premiums to attract customers, but in the long term the cost of auto insurance could continue to rise as insurance companies continue to face rising repair costs and loss rates.