While the cost of most goods and services has increased significantly over the last few months, some products have largely escaped inflationary pressures. Car insurance, an unwelcome cost to many Belgian households, appears to be falling in price, Belgian newspaper Le Soir reports.
Between July 2017 and July 2022, the average price of car insurance policies has dropped by 4.7%, all while inflation has increased by 17% in the same period.
However, Le Soir writes that a merger of Belgium's major insurer La Baloise last year in fact means that car insurance has remained largely stable since October last year. The newspaper states that figures from Assuralia (the association representing the insurance sector) confirm this trend. Since 2005, the price of an average insurance premium has only dropped by just over 10, or about 2.5%.
Market competition keeping prices low
But why has car insurance escaped the massive price increases of other sectors of the economy? Firstly, unlike other insurance coverages, there is no system for automatically indexing costs. Secondly, there is strong competition between auto insurers, which help make prices more affordable.
“It’s a key market where competition is strong and customers can easily change insurers,” explains Gerrit Feyaerts, spokesperson for AG Insurance. “The situation discourages companies from increasing their premiums, because if they do, they run the risk of losing market share.”
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The car insurance market, the expert says, has become increasingly competitive over recent months, especially due to a reduction of new vehicles. Claims made to insurers are also down.
Between 2011-2020, the percentage of claims has continued to decrease. This figure was 6.8% in 2011 and fell as low as 4.21% in 2020. Assuralia’s soon-to-be published 2021 figures may confirm this trend.
Consumers are warned that this trend will not continue forever. Inflation will eventually lead to changes in the way costs are calculated, as the price of spare parts and labour increase. It is difficult to predict how long the war in Ukraine will drag on and it remains to be seen by exactly how much policies will rise in the coming years.
