Car insurance costs have climbed noticeably, jumping about 25% over the past year. That surge translated into an annual premium increase of around 158 euros for many drivers, with typical premiums rising from roughly 627 to 785 euros. This movement has been described as a historic rise by the price index compiled by the comparison site Kelisto. The platform reports that around 23,000 monthly user ratings were used to assess nearly twenty insurers, highlighting how the price gains are affecting ordinary households. The result is a substantial hit to budgets, yet the portal helps readers avoid the extra costs tied to these price hikes. In total, the market has reached about 2 billion 340 million euros in value.
In the last quarter of the year, auto policy prices increased by 29% year over year. Yet the growth appears to have cooled, with a modest 0.29% rise by the third quarter of 2023. Kelisto experts anticipate that costs will stabilize through the current year, as reflected in the fourth quarter 2023 figures. While uncertainty remains, the trend seems to be leveling off rather than continuing to surge.
Price changes vary greatly by policy type. Expanded third-party policies show the smallest increases, rising about 12.31%. Third-party coverage grows by around 14.65%, while comprehensive or all-risk policies show the steepest climb, with increases near 34.61%. Those who carry the most complete level of coverage can expect to pay about 573.6 euros more annually than in 2022. Month-on-month data shows March leading the charge with a 10.13% jump and August following closely at 8.38% higher than the previous month.
All risk
The fourth-quarter rise in car policies brought extra yearly costs of more than 188 euros, with all-risk coverage contributing the largest share of the increase at about 41.69%. Third-party policies rose by 14.52%, while extended third-party plans grew by 14.99%.
When compared to the third quarter of 2022, the upward trend slowed, with all-risk coverage up only 0.29%. October 2023 saw a 3.98% drop versus September, and the total price of all-risk insurance fell by more than 6% before edging up again in subsequent months. The overall picture is difficult to trust, as car insurance prices have surged, yet many families find the most comprehensive options financially out of reach. The persistent inflation and volatile market conditions complicate the outlook for 2024. [Kelisto.es]
Industry insiders point to a second wave of inflation driven by higher costs in vehicle repairs and by insurers tightening their taps to attract only preferred customers. Higher risk profiles with more accidents or less driving experience face sharper price increases as carriers adjust pricing to reflect risk. The sector notes that what drivers experienced in a tough year is a direct consequence of broader price pressures across essential services. Inflationary tensions continue to affect fields such as insurance and food, according to Kelisto’s commentary.
More expensive repairs and tighter controls
Forecasts for 2023 forecasted a year of rising car insurance costs, and the reality generally matched those expectations. The surge was most pronounced for comprehensive policies. Two major drivers stand out: the rising cost of vehicle materials needed for repairs and a shift in insurer strategy toward selecting higher-value portfolios. Some insurers have been reluctant to offer very competitive rates for profiles deemed higher risk, leading to notably higher prices for those policies.
Another factor is the so-called open-bar era ending. Many insurers reportedly faced sustainability issues by bidding aggressively to grow portfolios, a strategy that can no longer be sustained. Industry leaders have warned that solvency must be preserved, with notable voices in the market underscoring the need to guard against losses as competitive pressure eases. This backdrop has particular resonance for younger and less experienced drivers, whose limited driving history makes them more exposed to higher premiums, especially under all-risk coverage where a single accident can imply significant costs.
The accident rate, a key concern for the industry, remains elevated in many regions after the easing of pandemic restrictions. Several major insurers in the Spanish market have commented on the results. Direct Line, for example, has explained to Kelisto that the current conditions produce losses and that, while they are aiming to retain the best customers, the situation is not uniform across all players and is unlikely to fully resolve within 2024. The overall message is clear: the pricing environment remains challenging for drivers and for insurers alike.