Vehicle insurance policy prices soar to pre-pandemic levels

Traffic in Estonia.
Traffic in Estonia. Source: Siim Lõvi /ERR

Fully-comprehensive insurance prices are on the rise and nrearing pre-pandemic levels, according to insurance companies, with a rise in claims contributing to the increase, as well as overall inflation being a factor.

Fully-comprehensive insurance policies, known in Estonia as Casco insurance, are costed based on the age and value of the car, the driving history of the insured, the scope of the policy etc, though it varies from insurer to insurer.

Kaido Naarits, head of the vehicle insurance portfolio with ERGO insurance, told ERR that: "Inevitably, the rate of inflation that is happening all around also finds its way into the prices of the insurance service."

During the pandemic, reduced traffic due in part to movement restrictions and remote working led to a fall in accidents and therefore in claims, ultimately leading to a 20-30 percent drop in insurance policy quotes in the first half of 2020, a level which remained viable through to the start of this year.

"The presdent-day insurance price level has moved back to the that of early 2020 due to the recovered traffic numbers … and increased claims," he said.

Aleksei Žemkov, head of risk insurance at Swedbank, gave by way of an example the average annual payment for motor insurance being €134 per annum in 2019, falling to €133 in 2020 and €102 last year, though this year the number of claims is back at 2019 frequencies - in 2019 the number of insurance cases stood at 36,134, in 2020itwas 29,746 and last year 35,892 Žemkov said, meaning policy price rises are likely on their way.

Inflation has also had an effect as repair, recovery and substitute vehicle costs are all higher.

Naarist said that this is exacerbated by a shortage of spare parts – meaning replacement vehicles offered by the insurer tend to be loaned out for longer than before.

Raivo Piibor, head of Coop Pank's insurance brokers, told ERR that wage inflation, too, will also lead to price increases, while to cap things off, the price of both new and used cars has significantly risen.

Claude Kaasik, group manager of vehicle insurance at PZU Kindlustus, told ERR that over the past year, payouts for both third-party and comprehensive insurance claims have risen by an average of 20-25 percent, though repair price inflation is the main component in overall rises, driven also by the proliferation of increasingly complex tech used in modern cars.

As to the future, Kaasik said: "Time will tell … but it is not possible to make predictions at this point."


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Editor: Andrew Whyte

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