Historic rise in car insurance; inflation accelerates prices

During the first two years of the pandemic, car insurance reported low prices, but in 2022 inflation is already taking its toll on these financial services. After continuous increases so far this year, at the end of the first half of October the cost of this protection accelerated by increasing 11.33% per year, a historical rise, according to Inegi data.

Inflation in this product reports a historical maximum and is influenced by various elements, from the increase in claims reported in companies, to the increase in the costs of spare parts, auto parts, which have not been immune either.

For example, in auto parts and accessories, inflation was 13.88%, items directly related to the repair of insured cars that report a claim.

Regarding the accident rate due to road accidents, a relevant behavior is reported, at the end of September this year the reported accidents reached 42,033 while in the same month last year the number of road events was 28,113, according to data from the Association Mexican Insurance Institutions (AMIS).

In the theft of insured cars, there was a decrease of 3% with respect to the last 12 months of the year. The figures of the insurance union report 60,905 illegal thefts of units. However, the reduction in thefts only manifested itself in cars and pick-up trucks, in heavy equipment and motorcycles thefts grew 15.5% and 17.5%, respectively.

Norma Alicia Rosas, general director of AMIS, reported that the impact of inflation on the pockets of those who hire this product will depend on the coverage they seek to hire.

How do you define when to raise?

The cost of these insurances depends on the coverage provided, the model of the car, who drives it and the entity or municipality where it circulates. But the price increases of these products are defined based on various factors.

For example, in the accident rate that companies face in this product and according to their insured vehicle fleet, it is how the rates are determined year after year.

“There is no single pattern that applies to all of them, each one defines how it is going to generate its costs, (…) it depends on all these factors, and all of them must be considered for pricing, plus other types of additional coverage, such as crane hauling, road support services, depend and will also depend on the composition of the product being purchased”, explained Norma Alicia.

For his part, Daniel Bandle, general director of AXA Mexico, highlighted that the inflation reported in car insurance has to do with the behavior they had in the pandemic when premiums fell substantially and now that mobility is already in pre-pandemic levels, which influences the accident rate, among other factors.

In cars, there are several effects that are influencing the price: mobility and therefore, also the frequency in the number of claims; the inflation that affects the items of labor and spare parts, and finally, the lack of supplies, spare parts and auto parts, emphasized the representative of AXA in Mexico.

yuridia.torres@eleconomista.mx