As people get to the end of the year, renewing insurance becomes a topic of discussion and car insurance costs have never been bigger.
Social inflation has become a growing phenomenon in the insurance industry, especially in US markets but reaching more globally too.
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The term refers to how the costs of insurance companies’ claims rise as a result of non-economic factors, and, as such, social inflation tends to be unpredictable, not necessarily following economic inflation.
It primarily affects property, casualty, and civil justice insurance, but life insurance can be affected to some extent too.
Insurtech Zego found that searches for cheaper car insurance increased by 125% over the year to August 2023. Against this backdrop, Admiral Group noted during its August 2023 earnings call that it will continue to increase motor insurance premiums and expects the market to follow suit with hikes.
GlobalData’s 2022 Insurance Consumer Survey found that only 21.7% of consumers who renewed motor insurance policies did not shop around at renewal. The same survey also notes that 46.6% shopped around but ultimately renewed, while 28.8% switched insurers (the remaining 2.9% were buying motor insurance for the first time). This survey was conducted in Q3 2022; the subsequent increase in premium inflation and searching around (according to Zego) suggests that significantly fewer than 21.7% of consumers will automatically renew their motor insurance in 2023.
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