Understanding the factors that influence increasing car insurance premiums in South Africa

With the increased cost of living and economic hardship, we seldom include a premium increase in our month-on-month budget forecasting.

While insurance premium calculations are usually based on a client’s personal risk profile – which includes factors such as a client’s gender, driving history, cost of the vehicle and distance travelled – there are additional variables that have an impact on the increase of vehicle insurance premiums, regardless of a client’s good driving record. However, as your risk advisor, it is our responsibility to ensure that your cover is carefully aligned with the current market and the realistic cost of repairs and other related services.

These variables include inflation, the cost of auto parts, and worldwide political upheaval. Covid-related knock-on effects and loadshedding are also significant contributors towards the increase in insurance premiums in South Africa. In addition to the rising inflation rates in South Africa, the prices of spare parts and tyres have also gone up.

In this article, we outline the major factors impacting motor premium increases, enabling you to better understand the dynamics at play in the South African car insurance industry.

Why are car insurance premiums increasing?


Inflation affects all sectors of the economy, notwithstanding the car insurance industry. In fact, the most significant cause of rising car insurance premiums is inflation, fuelled by increased expenses for repairs and replacement parts.

Insurers need to account for the increased costs in claims payouts and, as a result, these costs are recouped through higher premiums, leading to higher insurance costs across the board.

Factors influencing rising Car Insurance Premiums Infographic


Higher claims costs driven by inflation coupled with more frequent claims driven by climate change have had a toll on reinsurers.

The frequency and severity of catastrophic events have caused substantial rate increases in the global reinsurance market. In South Africa, the most developed insurance market on the continent, reinsurance rates are surpassing the global trend and, in some cases, tripling, as reinsurers and insurers grapple with an unprecedented number of claims.

Over the past few years, South Africa has experienced numerous high-risk events, including the pandemic, riots, and the looming threat of a power grid failure. Additionally, the country has faced several catastrophic events such as droughts, wildfires, and floods. The April 2022 KwaZulu-Natal floods have been identified as the largest natural catastrophe loss event in the country.

The sharp rise in reinsurance costs has ultimately led to significant insurance premium increases.


Following the Covid-19 pandemic, the global supply chain cycle has experienced significant strain and, as a result, motor vehicle repair and replacement costs have increased substantially. In addition, the recent hard lockdown in China has also affected the global distribution of spare motor parts.

The surge in cost of spare motor parts, labour and specialized equipment required for repairs has led to higher claim pay-outs. Consequently, premiums have been adjusted to ensure that insurers can adequately cover these rising costs.


The increase in potholes and the lack of maintenance has led to the deteriorating quality of our roads, which adversely affects drivers and the insurance industry.

In an article published by IOL on March 11th, 2023, Transport Minister Fikile Mbalula, says that South Africa is facing an “intractable challenge” as national roads continue to worsen.

According to Mbalula, 40% of the provincial network has reached the end of its design life, and about 80% of the national road network is older than its 20-year design life.

This creates further difficulties for drivers without comprehensive insurance because they might need to get additional rim and tyre coverage to cover losses brought on by dangerous road conditions.

Fortunately, there are products available, such as the Econorisk Tyre Product, which offers additional cover for your tyres and rims, which are at high risk of damage when on our roads.


Vehicle theft has also increased dramatically in South Africa – another factor contributing to the rise in car insurance premiums.

Reported hijackings in South Africa have increased by 30% since 2019, according to the South African Police Service (SAPS) report, which was released in February this year.

According to the statistics released, 23,025 hijackings had been reported by the end of 2022, representing an average of 63 vehicles each day. The provinces that experienced the most incidences of hijackings are Gauteng, KwaZulu Natal and the Western Cape.

The cost associated with replacing stolen vehicles and combating fraudulent claims has had a direct impact on insurance premiums.


South Africa has experienced a rise in both the frequency and severity of accidents on the roads, especially after lockdown where the risk of exposure was extremely low.

The pandemic and lockdown severely restricted human movement and social activity and, as a result, accident and crime rates dropped significantly.

More accidents translate into more claims and, as a result insurance premiums have been adjusted to reflect the increased risk associated with insuring vehicles.


With the uncertainty that comes with the cost of living increase, it’s important to understand what goes into a premium change. There are several factors that have impacted costing when it comes to motor insurance, as well as other areas of cover. It is important to understand these influences and the impact it has had on the industry when analysing and budgeting for adequate insurance cover.