Germany has experienced a 16% surge in car insurance prices within a year, and projections suggest a continuation of this upward trajectory, as reported by German media outlets such as Tagesschau and Fokus. However, the impact extends beyond Germany, affecting Luxembourg as well, and the driving force behind this surge is inflation.
The surge in car insurance costs is intrinsically linked to the substantial increase in vehicle repair expenses in recent years. At one Luxembourg-based insurance company, the cost of repairing damaged cars has surged by 8%, surpassing the average inflation rate of 3.7% for 2023.
This increase is substantiated by various factors. Employees’ hourly wages have seen a rise of approximately 17% over the past two years, primarily attributed to wage indexation. Additionally, the price of spare parts has witnessed a sharp uptick, increasing by 12% between 2021 and 2022 and further climbing by 11% in 2023, according to data from a Luxembourg insurance company.
While insurers strive to maintain competitive pricing, the mounting expenses in vehicle repairs and spare parts inevitably impact the overall cost of car insurance for customers. The surge is particularly evident in the automobile sector, contributing to a broader increase in the cost of maintaining and repairing vehicles.
According to the National Institute of Statistics and Economic Studies (STATEC), the average cost in this category rose by 4.14% between December 2022 and December 2023. The corresponding increase in insurance is estimated at 0.51% over the same period.
