The number of car owners who refuse to buy an OSAGO policy will grow

This forecast was shared during a press conference at DOS by the co-chairman of the Center for Strategic Studies of the Insurance Market, ex-head of the Federal Insurance Supervision Service Alexander Koval, and this trend is explained by the increase in prices for this type of insurance.

The other day, the price of OSAGO increased by 6%, and this is just a continuation of the trend that was established in the spring of this year. Today, the average check for OSAGO is about 6,800 rubles, while in April this figure was estimated at 5.5 thousand. Moreover, by the end of the year, experts predict an increase in the average price for OSAGO to 7,200 rubles. As Alexander Koval explained, the growth in the cost of OSAGO is an objective process, and the main problem that causes this process is the increase in the cost of spare parts:

“Not only spare parts have risen in price, the prices of the cars themselves have risen, and even the paper on which the policy is printed, and, of course, all this together affects the loss rate of insurers. It must be understood that the tariff increase is a forced measure: the Central Bank, as an insurance supervisory authority, has taken the path of expanding the tariff corridor, thereby giving insurers the opportunity to somehow vary in determining the price of a policy for motorists. But we do not fully understand and do not have transparent information about what further growth will be. It must be assumed that the price will not stop there and will grow. It is clear that to a greater extent this growth will be for those drivers who have little experience, who are more likely to get into accidents. But it is clear that the price of the policy will increase for all drivers in general. It is understandable that insurers will be afraid that those drivers who do not get into accidents at all or get into accidents rarely will go to their competitors. In this regard, they will probably offer some concessions: most likely, this will be a less significant increase in the price of the policy. But the fact that the price will rise is quite obvious.”

Although, as Alexander Koval noted, it would be very interesting to look at the pricing structure, since auto parts are mainly bought abroad, and the ruble has recently continued to triumphantly strengthen against the backdrop of the dollar and the euro:

“Unfortunately, neither the Central Bank nor insurers provide us with this pricing structure… On the one hand, insurers can be understood, because they are commercial structures, and their task is to make a profit. But, on the other hand, there is a supervisory body – the Central Bank of the Russian Federation, whose main task is to protect the legitimate rights and interests of policyholders. And in this situation of the continuing rise in prices for OSAGO, the Central Bank must find some kind of compromise. Another point that I would like to draw attention to is that we are expanding the tariff corridor, but the sum insured remains unchanged, so I think the Central Bank needs to react very quickly and increase the sum insured. Of course, you should calculate how much (up to 600 thousand rubles, 800 thousand and 1 million), but you need to go towards this. Since we are expanding the corridor, it is necessary to increase the sum insured. (…) Already today the problem of increasing the sum insured is overripe, because those 400 thousand rubles that we have now can only be enough for a very small repair, because even the cost of one headlight for a foreign car has increased from 30 thousand rubles to 170 thousand.

As Oleksandr Koval warned, it is short-sighted and dangerous to raise prices endlessly for young and inexperienced drivers:

“They will just ‘vote with their feet’ and won’t buy the policy. Unfortunately, there is also the fact that the number of motorists who do not purchase a policy is growing, with fines for them (after all, law-abiding drivers suffer from them), we are still standing still (now for driving without a policy, if it is at all was not issued, a fine of 800 rubles may be imposed – S.I.). Fines for car owners who drive without a policy are a repressive measure, but we need to think about increasing the fines for driving without policies.”

As the co-chairman of the Center for Strategic Studies of the Insurance Market recalled, at one time, insurers passed, and not without difficulty, a law on the so-called “in-kind compensation” through the State Duma:

“In the current situation, when the price of spare parts has risen so significantly, it is clear that insurers are not up to the task. This money for repairs even with minor damage will not be enough. Now they are modestly silent about this, but one can say that this is their problem, because they fought for what they ran into. But for many car owners, the current situation is a lifesaver, because the insurer is obliged (if he has no grounds for refusal, and there are very few of them) to take the car and repair it. Moreover, the law stipulates specific terms of repair, which are now very difficult to meet. I still don’t understand how insurance companies will get out of this situation, but what I’ve read so far is the conclusion of additional agreements with car owners to extend the repair period.”

In the future, as Alexander Koval suggests, it is possible that car owners will file lawsuits, and there may be many of them, and insurers will probably initiate changes to the law in order to create more favorable conditions for themselves. In his opinion, taking into account all of the above, if urgent measures are not taken, the OSAGO market can expect a collapse, because autumn is already coming, the number of accidents will increase, the waiting for spare parts will be delayed, and insurers will not have enough funds to pay out, and against the backdrop of all this the number of complaints to the Central Bank will increase.

Sergei Ishkov.

Photo by Kirill Zykov / Moskva Agency