Why the month of March is a good one to be re-evaluating your car insurance
Admittedly, its been tough psychologically and even more so financially, but the Aluma Capital Short-Term team are ready to assist you to find the best comparative quotes from different insurers, to make sure you’re covered with the best possible premiums that will alleviate some of the financial strain that has come from the current economic climate.
The Burning Question: Why Now?
Don’t be surprised if there is a significant increase in your premiums on your annual policy review this year, because there are premium increases on the cards. These hikes are brought on by the global effects of the Covid-19 pandemic, which has influenced changes in the economy, coupled with the July lootings that we had in the country last year.
Over the last year and a half, the world has gone through a lot and is only now starting to adjust to the “new normal”. One of the effects of the reduced production levels during the first phase of the pandemic is only now being felt as the world opens up again for business, and that has caused severe supply chain bottlenecks as the demand for goods far outweighs the ability of manufacturers to supply.
Chief among these challenges is the supply of vehicles, vehicle parts and paint globally. Paint prices alone have increased by 9% since last year and at the same time, the world is experiencing a severe shortage of the semiconductors and microchips used in the production of vehicles. Furthermore, constraints in shipping and global transportation have resulted in an escalation in the cost and time to procure replacement parts. To highlight the severity of this effect, global shipping costs have increased by 170% during 2021 according to the Drewry World Container Index.
How this has affected Insurers
Insurers are reliant on these factors and have experienced this impact first-hand, and as a result, there has been a sharp escalation in both vehicle repair costs and the cost of total losses such as write-offs and thefts. Vehicle repair costs have far outpaced inflation and are up to 9% higher in the last six months alone (resulting in an annualized rate of 18% per annum).
The rate of vehicle depreciation from year to year is also lower than historically experienced due to the growing demand for second-hand cars. This is a global phenomenon and has affected vehicle traders and insurers around the world.
At the same time as the cost of vehicle claims have been increasing, we have also seen an unexpected rise in the frequency and value of home insurance claims from building costs to electronic equipment replacement costs. For example, in 2021 we experienced 37% more hours of load-shedding than in 2020, resulting in a 23% increase in power surge claims.
These global circumstances are unprecedented and far beyond what may be considered normal or allowed for in standard insurance pricing. Taking all this into account, the price of insurance is set to go up at the end of March and as a rule of thumb, one should at least check for comparative insurance quotes at least once a year under normal circumstances, and now is a time better than any to do so. Contact Aluma today and we can assist you in getting comparative quotes today.
Please send your contact details to [email protected] and one of our FSCA approved advisors will contact you.