This article shows that the UK average annual car quote has increased to around £1,000, stemming from a surge in the cost of claims, driven by big increases in the price of car parts, second-hand cars, and labour. The average car insurance premium in Portugal is around €150 a year. This means that Portuguese drivers pay about seven times less than British drivers for their car insurance. This difference is partly explained by the different purchasing power parity, levels of coverage, taxes, and regulations in each country, but it also suggests that the Portuguese car insurance market is highly underpriced. Portuguese carriers may need to raise their quotes to ensure motor insurance profitability, especially in light of the rising claims costs, inflation, and regulatory changes. However, they may also face resistance from customers, who may not be willing to accept such significant price increases.
Therefore, Portuguese carriers may have to find other ways to improve their efficiency, innovation, and customer service, in order to remain profitable and sustainable in the long run, such as: (i) Using advanced analytics and artificial intelligence to elastically optimize their pricing, underwriting, and claims processes, and to better understand and segment their customers; (ii) Leveraging digital channels and platforms to enhance their customer experience, and to offer more personalized and convenient services, such as online quotes, claims, and renewals; (iii) Developing innovative value-driven products and services that meet the changing needs and preferences of their customers, such as usage-based insurance, telematics, and loyalty programs; and (iv) Collaborating and partnering with other players in the insurance ecosystem, such as aggregators, insurtechs, and third-party providers, to access new markets, customers, and data sources, and to offer more value-added services. The Portuguese car insurance market is at a crossroads: It can either adapt to the changing environment and embrace the opportunities of innovation and digitalization, or it can remain stuck in the past and risk losing its competitiveness and sustainability!
19/01/2024
Source: https://www.ft.com/content/4bb22968-79ef-44e7-a0b7-04cbbc2c9098