The Swiss Re Institute has indicated that the significant increases in personal motor insurance premiums are nearing their peak in the US, UK and EU, with a projected flattening of month-on-month changes in the coming months.
This anticipated stabilisation is attributed to various factors, including disinflation effects, strengthened underwriting results, and heightened competition in the insurance market. As a result, consumers can expect a reduction in the cost of car insurance in the foreseeable future.
The sharp rise in motor insurance premiums, particularly in Germany, the UK, and the US, has notably contributed to pushing headline consumer price inflation higher.
Official data reveals substantial year-on-year increases in motor insurance CPI, with Germany and the US experiencing particularly significant spikes. However, there are discrepancies between different sources of data suggesting potential overestimations in some cases.
The surge in motor insurance prices can be traced back to various factors, including increased losses, higher repair and replacement costs due to global supply chain disruptions, and a rise in accidents following the easing of lockdown restrictions.
In the US, supply-side shortages led to significant increases in the cost of used and new vehicles, exacerbating market conditions and resulting in underwriting losses for insurers.
Looking ahead, experts anticipate that the recent adjustments in pricing will lead to improved underwriting results in the coming years. Lower inflation in motor-related categories and easing claims inflation are expected to contribute to this trend. However, intensified competition in the insurance market may pose challenges to underwriting profitability, particularly in the US and UK.
In response to rising premiums, consumers are increasingly shopping around for better deals from insurers. This trend, combined with expectations of cooling motor CPI in the US, suggests that effective average rate changes may remain overstated in the near term. Similarly, in Germany and the UK, insurers are facing pressure to limit further rate increases, signalling a shift towards a more competitive market landscape.
Overall, the expected stabilisation of car insurance premiums offers a glimmer of relief to consumers amidst ongoing economic challenges and regional instability. As insurers navigate evolving market dynamics, consumers may benefit from increased transparency and competition in the motor insurance sector.
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