Data for the period 2015-2024 show a particularly important and difficult to explain trend in the market of compulsory insurance “Civil liability“, write the Institute for Road Safety.
In ten years, the number of insured motor vehicles has increased by 38.8% – from 2.534 million to 3.518 million vehicles.
At the same time, the frequency of claims is decreasing by 18.7% – from 4.45% to 3.62%. That is, we have more insured cars and a lower relative frequency of claims. And yet the price of “Civil liability“ is increasing. According to publicly quoted data, the average price in 2015 was around 180 leva, or approximately 92 euros, while the average annual price in 2024 is 144.1 euros.
This represents an increase of approximately 56.6%.
The data on exposure, claims and frequency are from the statistics provided, while the price data are from public market data. The Financial Supervision Commission publishes the official data on the number and value of claims filed under “Third Party Liability“.
What does this mean?
Here we must make an important distinction. The absolute number of claims filed is not decreasing – it is increasing by 13%. But the cars in the insurance exposure are increasing by almost 39%. Therefore, the relative frequency of claims decreases from 4.45% to 3.62%.
And this is precisely the essential point.
If we have more insured cars, but a lower frequency of claims, it would be logical to expect at least some of this effect to have a favorable impact on the price. Instead, over the same period, the average price of “Third Party Liability“ increased by about 56.6%.
This shows something very important:
The number of claims in itself does not determine the price of insurance. And this is the fundamental problem with trying to present bonus-malus as a mechanism that, through the number of violations or claims, will automatically lead to a fair price for each driver. A damage of 500 euros and a damage of 500,000 euros are the same damage in terms of number, but they are completely different financial risks.
Therefore:
Number of damages ≠ value of the risk.
And even less:
More damages ≠ automatically more expensive insurance, and less damages ≠ automatically cheaper insurance.
The Association of Bulgarian Insurers itself points out that the price is influenced not only by the frequency of damage, but also by the amount of compensation, the prices of repairs, spare parts, medical services and other factors.
Therefore, the question regarding bonus-malus is very simple:
How will this system prove that reducing the number of damages for a specific driver actually leads to a reduction in his financial risk and, accordingly, to a reduction in the price of his insurance?
Because historical data for the entire market shows exactly the opposite:
2015-2024:
+38.8% insured vehicles;
+13.0% claimed claims;
−18.7% frequency of claims;
+56.6% average price of „Third party liability“.
This is an anomaly that cannot be explained only by the number of damages. And that is why a bonus-malus, built mainly on counting violations and damages, without taking into account the real value of the risk, cannot be presented as a sufficient mechanism for fair pricing and even less as a proven tool for increasing road safety.
And the most important question:
If over a ten-year period the frequency of claims decreases by almost 19%, and the price of „Third party liability“ increases by almost 57%, why should society believe that yet another system of redistributing the price according to the number of violations will automatically make insurance fairer and improve road safety?
This has not been proven. This is what needs to be proven.