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The purchasing power of the French goes through food, energy, but also through the insurance sector. The market is facing challenges that are likely to lead to higher car insurance premiums in 2023.
Last September, the Minister of Economy and Finance received representatives of insurance companies to urge them to curb the increase in car insurance prices, as well as motorcycle and home insurance for the year 2023. Even while most have promised to limit this increase to below the level of inflation, what will it actually be?
An increase of 3 to 5%
The current inflationary context will undoubtedly increase insurance prices for the next year. Facts & Figures, a company specializing in the insurance and social security sector, estimates that car insurance premiums will increase by 3 to 5% in 2023.
This increase is due to various factors.
The cost of car repairs has risen sharply: the spare parts prices increased by 8.1% over a year according to the CEO of France Assureurs. For example, the price of brake parts increased by 8.88% (figures for the second half of 2022, taken from Parisian-Today in France). More car insurance companies want to make more use of recycled partsbut the share is still low.
That post-pandemic consequences also affected the sector by Auto parts and raw material. That factories, located mainly in Asia, has not fully resumed the pace from before the health crisis. Result: demand is greater than supply. In addition, other factors drive prices up, such as shipping costs which is higher than before.
Inflation and the war taking place in Eastern Europe also affect the price of raw materials.
Another phenomenon is also added: climatic events. In recent years, France has faced increasingly frequent and violent natural risks. That stormsthem floods as well as hail is the cause of many damages to vehicles.
All this makes irrevocable increase the bill and therefore costs for compensation from insurance companies. Despite this context, some insurance companies have already announced that they would keep their promise. That May stated, last October, a 2% limit the increase in car insurance rates.