Wednesday, November 30, 2022
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UFC-Que Choisir warns of rising car insurance prices

The consumer association UFC-Que Choisir also announces a increase in car insurance rates in 2023. Invoice for natural disasters, cost of spare parts, inflation… There are many reasons for this increase, but it can still be avoided by consulting competitors’ prices for free using a comparator.

“Again it will be more expensive”

“Again it will be more expensive” : this is the observation of the consumer association UFC-Que Choisir, a few weeks before the planned increase in car insurance prices. As expected by our IPAP, the car insurance premiums expected to increase by 2.5% to 3% in 2023.

To understand the reasons for this increase, the consumer association asked insurance companies, and in particular Macif. Gensidigen explains that it has already paid 750 million euros this year only to compensate claims related to natural disasters, three times more than usual.

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The heavy bill of natural disasters

It must be remembered that the year 2022 was particularly devastating for insurance companies’ accounts. According to the association France Assureurs, which represents them, the total damage bill amounts to 4.3 billion euros for more than 1.2 million claims linked to a climatic event. Over the past five years, average claim costs have been closer 3.5 billion euros.

The rise in auto premiums is partly explained by this big bill: casualty insurers have paid a lot in claims and expect to do so in 2023 as well, so they are raising prices to preserve their margins.

Prior to the price increase, Economy Minister Bruno Le Maire had summoned the insurance companies from the start of the school year to ask them not to have too heavy a hand on “everyday contracts” (car and home). Finally, the latter undertook to limit the increase in prices to below inflation.

However, in light of the current Consumer Price Index (CPI), this pledge should allow them to increase contributions by at least 5%. For the time being, the expectations do not reach that far, not to mention that in order to preserve the purchasing power of the most vulnerable, the insurance companies have also committed to a 100 euro discount on car contracts for young jobseekers.

Increase in the value of cars and spare parts

The level of inflation, unprecedented since 1985, is of course also affecting all sectors, including insurance. In this connection, the companies are particularly affected by the current increases and shortages in the car industry. Nevertheless, it must be said that inflation actually exacerbates a structural problem: The value of vehicles and parts has been increasing for years.

The development of electric and hybrid cars has contributed to this technological leap, which, together with the manufacturers’ monopoly on spare parts, burdens the costs of insurance companies every year. As an example, UFC-Que Choisir mentions the company Bosch France, which produces these new mirrors, which now consist of a sensor and an electric motor at an increasingly higher price…

For this reason, world inflation does not help matters: with the increase in energy costs, sea transport is also more expensive, as are the fixed costs of the companies that manufacture these parts (heat, electricity, etc.). Thus, according to UFC-Que Choisir, current inflation on body parts prices will be around 7%compared to 4% in normal times. Not to mention the shortages related to the war in Ukraine, which increased production costs (steel, nickel, etc.).

To reduce the impact of the price of the parts on the contributions, the solution would be twofold. First, use more used parts, but mechanics still make little use of them: according to a survey by Direct Assurance, only half of motorists (60%) say that they have already been offered to them. So legislate for the manufacturers’ monopoly on spare parts, which remains a reality despite the vote on the climate act last year.

Finally, if you want the advertised price increase, the easiest and fastest way is to go through a car insurance comparator. There is great reason to believe that the insurance companies will continue to offer more attractive prices to their new customers, and therefore the increase will weigh more heavily on loyal policyholders. With the Hamon law, the option to switch for free to a more attractive price is thus still an option to be preferred.

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