The price increases do not stop: the increase in vehicle thefts (some of which were intended to be dismantled for the purpose of selling spare parts) and the sharp increase in the price of raw materials in the automotive industry for the production of spare parts (steel, aluminum, energy, paints, etc.) have led to a sharp increase in car insurance prices in the past two years.
Since 2021, the prices of comprehensive insurance have jumped sharply in Israel by about 45 per cent. Insurance experts we spoke with are convinced that this increase will continue into the coming year.
The highest price increases for comprehensive insurance were recorded for family cars, whose price increased by 60 per cent since 2021, and the lowest for mini car insurance, which increased by 36 per cent. The increase in insurance prices for SUVs amounted to 50%.
In contrast, the average price for compulsory insurance in 2021 was about NIS 1,530 and rose moderately to NIS 1,630 in 2023, which is only about 6.5% on average, according to an analysis conducted by the Israeli insurtech company Bestie, which compares insurance policies of various types with most of the leading insurance companies in Israel.
Everything became more expensive at the same time
What causes the increase in insurance prices? According to Basti's CEO, Ido Friedman: "The increases in insurance prices are caused by several factors. Today's modern cars are equipped with innovative technologies and advanced safety features that are installed inside and outside the vehicle and make repairs more expensive. In addition, raw materials in the automotive industry (steel, aluminum, energy, paints, etc.) have also become very expensive."
Ido Friedman, Photo: PR
Friedman adds: "In the reality of the cost of living in Israel, our recommendation is clear – before buying an insurance product, and especially in car insurance whose prices 'gave gas', it is important that consumers act wisely and compare the insurance companies.
"The insurance companies don't see this trend closing in the next year or two. How much more will it cost? I don't think the increases will continue to be 60%-50%, but the trend of upward rather than downward will continue because at the moment there are no solutions for this. There are no solutions to theft or parts manufacturing right now, so there's nothing to change that at this point. It's quite possible that in a year or two, the pace of parts production will be higher, and people will have less motivation to steal."
Is car insurance prices expected to continue to rise?
"Unfortunately, the answer is yes. This is due to a high interest rate and inflation environment in Israel, and around the world in general," Shai Sadeh, Chairman of the General Insurance Committee of the Association of Insurance Agents, responds to this question.
"Due to the increase in interest rates around the world, vehicles are becoming more expensive, spare parts are becoming more expensive, and the cost of transporting vehicles and spare parts is increasing. Unfortunately, we hear about an increase in taxes on electric vehicles, which have become very common on Israel's roads, which will cause prices to rise in insurance alongside many other areas."
Wanted: Increase enforcement
Sadeh goes on to explain that in his view, "the government must intervene in order to bring a consumer solution and open the market to competition from around the world by allowing foreign insurance companies to operate in Israel and bringing additional players into the spare parts field.
"The state must step up enforcement on car thefts, which have become a plague of the state. The same applies to road accidents through education, enforcement and changing the driving habits of the Israeli driver. Reducing the number of road accidents, and unfortunately also the resulting injuries, will lead to a reduction in insurance rates in the long run."
How do we compare internationally?
"Israel is unique in the field of bodily injury in road accidents due to the Road Accident Victims Compensation Law, which provides compensation in the event of a road accident without a question of guilt. This results in relatively high compensation for road accident controls (bodily injury).
Photo: Ginny Ancho Ghosh // Enforcement needed,
"In addition, the use of public transportation in the State of Israel is insufficient, which increases the amount traveled by private vehicles for road congestion and also for road accidents that include insurance benefits for casualties," Sadeh concludes.
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