
MY BASIC COMPULSORY THIRD PARTY LIABILITY PREMIUM HAS INCREASED ON RENEWAL. WHY?
Indeed, if you have insured your vehicle(s) in order to comply with compulsory requirements imposed by legislation, you must have been informed of an increase in your premium at your next renewal. There are several reasons that created a need, among the insurance industry overall, to first consider, and then proceed to apply a general increase in premiums.
- INFLATION: It is now a worldwide phenomenon – inflation rates are on the rise. In Cyprus, the inflation rate is currently at 3.10%, whereas, in past years, a long term average was in the region of 2%. Practically, what this means is that everything is more expensive, and that includes everything involved in the car repair industry. Reports worldwide show an increase in the region of 20% for purchasing new car parts. Insurance companies are in the business of paying car repair shops for damages incurred to third parties, if their Insured is liable. It is only fair that an adjustment is made on the basic premium.
- MORE ACCIDENTS– JUST NOTE:
- In their 9-month report statistics (regarding comparison between first nine months of 2024 compared to 2023), the Insurance Companies Association of Cyprus reported a 5.3% increase in Claims Incurred in the Motor Sector.
- Cyprus Police reported 1528 “other road accidents” just for the period 13/1/2025 – 19/1/2025- less than a week. (*Note: Road Traffic Police visit accident sites when injuries are involved- the above number does not reflect actual RTA’s attended to by Accident Care services).
Even though above statistics do not reflect the severity of the road accidents, and claims involved, the trend is clear. More road accidents, more damages, more injuries incurred, more compensation to be rewarded, everything on the rise. We need a reminder here – for every basic Motor Third Party Liability Policy issued, an insurance company undertakes a risk of around 36.000.000 Euro. Compared to the premium payable- no comment needed, but it should be clear to any reasonable Insured, that insurance companies, in order to ensure their very viability, attempt to improve their loss ratios, and provide good and sound submission to their Supervisory Authority, would be negligent themselves, if they didn’t proceed to adjustment of premiums, as to reflect the constantly rising number of accidents, compensation amounts, reserve amounts and general amounts of cost per claim. Not to mention the requirement for a sound Solvency Ratio!
- INSURED’S / INSURED VEHICLE PROFILE: An increase in premium is to be expected if the Insured has filed a claim, if they have added authorised drivers under 25, or over 70+ to their vehicles. Other factors are taken into account by Motor Underwriting Departments, such as age of vehicle, any amendments on it or any change in any relevant factor between one insurance period and the next. The truth is, an insurance company that renews on expiring terms without looking at amendments on the policy at renewal, would be irresponsible.
- ROAD ACCIDENT ASSISTANCE: A compulsory Third Party Liability Policy always includes services for accident care. Insurance companies are associated with specialised companies catering for accident care. Their associates are on the scene, taking statements and creating reports on the specifics of road traffic accidents. In Cyprus, companies providing these services are limited – if they increase their fees for their services, inevitably companies will have to increase premiums to allow for such increase.
I HAVE A COMPREHENSIVE MOTOR POLICY AND I HAVE RECEIVED A QUOTATION FAR BEYOND WHAT I PAID LAST YEAR. WHY?
The Comprehensive Insurance Motor Policy includes Third Party Liability compulsory Insurance, so everything above applies to your Policy. But, perhaps, your company or agent believes you should be covered holistically, ensuring you are compensated fairly. You should look at your covers.
- A Wet Perils coverage is, at this time, essential . You will pay more, but you will be compensated in the event of a hailstorm and other natural hazards. Climate Change is real, and we have seen a cyclone, a tornado and hurricanes in the past year, and the predictions is that these phenomena shall increase in frequency. Cover for those shall be an extra cost on your premium, but, times and seasons change, and at some point, the small extra you are charged with, will be worth it.
- Windscreen cover – this is an all-risks cover. It costs a little extra, but – rascals might throw stones on a car for fun, they might walk on it! (it has happened!), damage from stones flaying away from trucks driving on highways is a common phenomenon, and those are just few examples of scenarios. For a little extra, a windscreen break will be covered and the vehicle restored.
- People are being careless, drivers scrape by parked cars causing damage (not covered by MIF if unknown), therefore it would be wise for any Insured to take out a Comprehensive Insurance Policy. The Insurance company will pay up.
- And – as above, known vehicles, holding an Insurance Policy, may create similar damage. If the Insured has a Comprehensive Motor Policy, their Insurers will pay up and then chase the liable person’s company for recovery…. Isn’t this a more carefree version – than for an Insured undertaking procedures against insurance companies by themselves?
- Comprehensive Motor Insurance Policies – if you look – contain some hidden “perks” – such as covers for personal effects, or personal accident….. Check with your Insurers. One might think they are unnecessary but for a small extra, if something happens, the Insured will be happy this was their decision.
Your Motor Insurance Premiums may increase, not because you choose but because of changing times. But – you should want an increase that will ensure that YOU are compensated fairly. Consider this. Better be safe than sorry!