Motor insurance claim values have shot up by more than a third in just five years due to more vehicles on the road, an increase in more sophisticated cars and the deteriorating state of roads.

Claims last year reached a whopping €44 million, an increase of €12 million over 2009, Malta Insurance Association director general Adrian Galea told The Sunday Times of Malta.

However, he pointed out that an increase in premiums was unlikely due to the highly competitive insurance market. “There is no way insurance companies would consider such an option as they would risk losing customers to their rivals,” he said.

Over the same period, premiums increased by just five per cent, which does not cover the increase in the value of claims paid as well as other overheads like commission to sub-agents, he said.

Data provided by the association shows that the highest claims were paid in 2013, when payouts totalled €48.5 million, 52 per cent more than four years before. However, Mr Galea noted that this spike was exacerbated as a result of a heavy hailstorm in January 2013 which dented several cars and even cracked windscreens.

The lowest increase in claims was registered in 2012 when insurance companies forked out €37.5 million. This was still 17 per cent higher than 2009.

Though no detailed breakdown figures of these totals exist, general trends have been observed.

The rise in payouts corresponds to the ever-increasing number of vehicles on the roads, which by the end of last year totalled 335,000  a 12 per cent increase over 2009.

Consequently, roads are fast becoming saturated and in some cases the volume of traffic exceeds capacity.

“Roads have become congested, thus increasing the chances of collisions,” Mr Galea said.

Secondly, he noted that a significant number of claims were due to the poor state of roads or accidents related to well-known blind spots, which were the result of bad road design. Though in recent years millions of euros in EU funds have been channelled to upgrade the road network with some notable progress, the quality of Malta’s roads remains bad.

Payouts go up with rise in vehicles

“The situation is worse especially after a prolonged wet season like this winter, whereby potholes increase dramatically,” he said.

“These may prove rather costly especially if they cause damage to the suspension system, the steering mechanism and alloy wheels. In such case the only viable option is to file a claim,” he said.

Nowadays, a side mirror may cost up to €1,000

Another factor which also caused claims to soar is the expensive parts and technology in modern cars.

“Nowadays, a side mirror may cost up to €1,000 as it includes features like a temperature sensor, an electronic mechanism to adjust it from the inside and even the indicators,” he said.

This means fixing a basic vehicle part warrants highly skilled mechanics to install it, which would push the overall cost of the repair even more.

“While nowadays car owners want the very latest standards in comfort and security, it comes at a cost which more often than not has to be borne by insurances,” Mr Galea said.