Mapfre warns of a general price increase in car insurance

The Spanish leader in car insurance, Mapfre, warns of a general increase in the policies of this activity after in 2022 there has been both a considerable increase in the accident rate after the end of the covid and a sharp increase in costs replacement parts, transport or vehicles.

Thomas Osborne
Thomas Osborne
13 February 2023 Monday 19:43
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Mapfre warns of a general price increase in car insurance

The Spanish leader in car insurance, Mapfre, warns of a general increase in the policies of this activity after in 2022 there has been both a considerable increase in the accident rate after the end of the covid and a sharp increase in costs replacement parts, transport or vehicles.

"The results of automobile insurance are not being good, neither for Mapfre nor for any company in the world. There has been an abnormal and sudden situation," said the president of the insurer, Antonio Huertas, at the press conference in presentation of annual results. "You have to be aware and realistic" and the forecast is that "we will adjust prices appropriately to maintain the solvency of the companies" and to ensure "a sufficiency in the premiums that allows us to operate not only in the short term, but also in the medium and long term".

Mapfre is the number one car insurance company in Spain, with 6 million customers and a 20% market share. In 2022, the costs of this business have exceeded income by 106%, which has caused a deficit that does not occur in any other business. Huertas has ensured that this trend is "generalized" and occurs especially in the United States, where its Spanish subsidiary, highly exposed to these insurances, has suffered losses. In this country, there are insurers with a deficit of 111% and the biggest losses in a hundred years.

In the case of Mapfre, it has indicated that the "adjustment" will be given "depending on the profile of each client", so that "some will go up and another will go down" according to their risk, although the former will be more than the seconds. "The average premiums for car insurance in Spain not only have not risen in ten years, but have fallen" because "it is one of the most competitive services."

"The effort that the companies have made has been extraordinary, but this circumstance occurs when there are stable conditions, but now there are sudden changes," he stated. Mapfre, he added, will not address the increases "suddenly" and regrets that in recent years, in this business, "prices have often been more based on the competitor than on the real cost structure."

Huertas has also predicted that this year or next private health insurance will become the main category in Spain, ahead of auto insurance. The latest annual report from the association of insurers Unespa puts the billing of health insurance in Spain at more than 10,000 million euros in 2022, compared to just over 11,000 million for the automotive industry.

"This must not be seen as a discredit of the public health situation or that private insurance benefits from it. A large part of Spanish families see it as something of a complementary nature," said Huertas. "We do not believe that there are direct communicating vessels" between the problems of public health and the growth of the private sector.

Private health insurance, he assured, were the only ones that have not stopped increasing even during the previous financial crisis. "They have not stopped growing and in a very short time private health insurance will become the first in the Spanish automotive insurance industry, if not this year, then next."

He also said that private health centers are also "attentive and concerned about the difficulties in hiring health personnel", although "fortunately the problems that exist in public health do not arise."

The president of Mapfre has also affirmed that it is capable of offering investment products that are better than Treasury bills and that "now is a good time for life and savings insurance." At the same time, the insurer, within her investment program, acknowledges that she is also betting on Treasury bills against bank deposits.

Mapfre has a presence in Turkey and has described the earthquake in the country as a "medium type loss". He does not believe that it will have an effect on the accounts of his insurance business, but he is waiting to know the impact on the reinsurer. It has also launched a fundraising campaign to help the victims in which for every euro put in by donors, they commit to putting one more euro.