Between the drop in claims due to the Coronavirus pandemic and the increase in spare parts, auto insurance first fell… to probably increase better next year! All our explanations on the price war which will decide the amount of your contributions in 2022.
80% reduction in claims
The first confinement saw the loss experience, that is to say the rate of accidents observed dropped to almost disappear. The fall in claims would have reached more than 80%, according to industry experts, due to the scarcity of thefts and accidents. This phenomenon would represent around 2.2 billion euros in savings compared to the previous year..
This trend so increased with the pandemic is not however completely new since over the past 10 years, the number of people injured in car accidents has fallen by 12% (84,461 to 74,165) and that the number of people killed fell by 19%.
Some large or small players in the sector have announced that they will freeze their auto insurance rates for 2021, and for a few even reimburse some of the policyholders or compensate them in order to pass on the massive drop in road traffic and the losses that have caused it accompany.
High inflation of automotive spare parts
The price freeze does not seem to be able to last, however, because the price increases for automotive spare parts promise to be sustained in 2022 and are likely to change the situation. Indeed, insurers are facing a strong and regular inflation of automotive spare parts. After an increase of 6% between 2018 and 2019, the price of these manufactured products climbed another 4.4% between 2019 and 2020.
And the evolution of the French fleet does not bode well because the significant rise of SUVs, particularly expensive in spare parts, are pushing these increases to 7.8% ! Among the most expensive parts, the windshield saw its price increase by 11% in 2019 alone. And this price can still explode since it is estimated at 308 € for a Peugeot 508 and at 1007 € for a Audi Q5 SUV! Bumpers follow this trend: it will cost an insurer € 313 for a Toyota Yaris and € 1,170 for a Citroën DS7.
SUVs, which have more and more electronics embedded in their construction parts, and the cost of labor which is increasing at a rate above inflation, explain the price boom. It should be remembered that the growth rate was 2.8% per year over the last 8 years (3.2% in 2020), while the cost of paint ingredients at 3.5% (4.2% in 2020 ). At Tesla, prices have become so high that some insurers even refuse to cover these vehicles!
An image to restore
Freezing car prices is part of an essential communication campaign to improve the image of insurers. The first confinement has indeed greatly tarnished it because many policyholders have not understood the reasons why insurers have refused to agree to reimbursements.
We must also point out the increasingly heightened competition in the market, with the massive arrival of credit institutions marketing insurance contracts, which captured nearly 75% of new auto contracts signed in 2019.. And To maintain their commercial momentum, bank-insurers even reduced the average amount of premiums by € 3 between 2018 and 2019.
Auto insurance is therefore likely to have a bad surprise in store for us in 2022, unless the unbridled competition in the market manages to contain the rise in prices …
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