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Car insurance headed for low-key yearend campaign

While car owners must live with ever growing insurance costs, the usual end-of-year craze for switching insurance companies promises to be low-key in 2016.

According to the data of market leading online insurance website Netrisk.hu, the average yearly premium for compulsory car liability insurance was HUF 32,000 in Q3 2016, which represents a year-on-year increase of 21%. However, there is worse to come. As shown by statistics of the recently launched end-of-the year campaign, where car owners have the chance to cherry-pick a better offer for the upcoming year, a further average hike of 10-12% should be expected. 

“There is not much of a structural change for premium calculations. The biggest discounts can be raked in in the usual manner: by buying multiple insurance policies simultaneously, paying the annual fee in one go, opting for bank transfer payment and committing to maintain contact with the insurance company electronically,” László Sebestyén, CEO of Netrisk tells the Budapest Business Journal. As he highlighted, cross-sales methods are widely used during the process, as that is what gives a real boost to the revenues of the insurance firms.

Fewer vehicles are concerned by this campaign, though. As a result of a previous change in legislation, insurers are prohibited from offering better conditions to new clients than existing ones. Therefore, there will be a lot less drivers this time who will terminate their agreement, just to enter into a new one with the same company. Last year such transactions carved out more than one-third of the total number of contracts ordered via Netrisk.hu.

A declining mood to hunt

On the other hand, prior to 2010, the default date of termination of insurance contracts was January 1; that is why November was the routine hunt for premium bargains. But that default date has now been moved to the time of the vehicleʼs purchase, so the number of cars concerned by the year-end extravaganza is going down gradually. “We are talking about slightly more than 1.1 million cars, and insurers apparently are focusing less on this period,” Sebestyén added. “They are legally allowed to announce their premiums throughout the year, and now three firms have made use of this opportunity to the extent that they have even refused to announce new premiums tailor-made for the annual campaign.”

Two pieces of data sum up perfectly the evolving phenomenon: in 2016 there have been a total of 60 new announcements on the market, and two companies have gone as far as updated premiums every month.

As opposed to 180,000 people last year, this time around 100,000-120,000 may switch insurance companies, but that includes 25,000 drivers who have been with MKB Általános Biztosító; MKB will terminate their contracts unilaterally due to its acquisition by CIG Pannónia.

Another obvious trend is that people are giving up on consulting bricks-and-mortar affiliates. “The proportion of contracts made online in the compulsory car liability segment amounts to 60%, and we are counting on this to grow further,” Sebestyén said.