Insurance premiums skyrocketing due to high repair costs for tech-heavy & electric cars

Car insurance premiums increased significantly in recent years as the costs to repair damages skyrocketed. New cars are filled with technology, so even seemingly simple repairs often cost a lot. Electric cars also often involve expensive damage, insurers told the Telegraaf.

The average car insurance has become 30 percent more expensive in two years, according to calculations by comparison site Independer. In July 2022, policyholders paid an average of 916.27 euros per year. This July, the average premium was 1,186.87 euros. In the past decade, this policy price has more than doubled in the Netherlands.

“It is not necessarily that more damage is being done. The average cost per damage has increased,” CEO David Knibbe of NN Group, one of the larger players in damage insurance, told the newspaper. “That makes sense because new cars are now packed with technology.”

There are also more electric cars in the fleet. “They don’t cause more damage per se, but they are heavier because of those batteries. So if they hit something, there is often more impact.”

On top of that, insurers are also dealing with price increases. “Most companies have increased salaries, and that also increases repair costs somewhat,” Knibbe said. Earlier this year, NN Group increased its premiums across the board by 12.5 percent.

Bianca Tetteroo, CEO of insurance giant Achmea, confirmed the development. Even small damage costs a lot to repair these days, she said. “A bumper now also has a lot of technology like sensors and cameras. A small collision can already cause a lot of damage,” Tetteroo told the Telegraaf. Achmea increased damage premiums by 8 to 9 percent on average.

“It simply takes longer for the damage to cars to be repaired by specialist companies than it did five or ten years ago. There is a great shortage of skilled personnel. A longer repair time automatically also means that we spend more money on renting replacement transport for our customers,” Tetteroo said. “The costs at the damage repair companies are also increasing. With a shortage in the labor market, it has become a complex puzzle.”

The higher insurance premiums affect younger drivers more than average. Those between 18 and 24 saw car insurance premiums rise to around 2,000 euros per year in July 2024. Compared to the same month in 2022, young people paid 500 euros more, according to the Independer’s calculations. Insurers consider young drivers riskier, so they charge them higher premiums.