Rising Spare Parts Costs Push Motor Insurance Compensation Higher by Up to 20%
Egypt’s motor insurance market is witnessing a noticeable increase in compensation costs during 2026, driven primarily by rising spare parts prices and the return of “overprice” practices in the automotive sector, according to industry estimates.
Insurance sector sources said the cost of vehicle repair claims has climbed between 5% and 20% across several vehicle categories since the beginning of the year, placing additional pressure on insurance companies already dealing with higher operating expenses and inflationary market conditions.
The increase comes as spare parts prices continue to rise due to ongoing import costs, foreign currency pressures, shipping expenses, and fluctuations affecting the local automotive market. The situation has been further complicated by the gradual return of “overprice” premiums on certain vehicle models amid supply shortages and growing consumer demand.
Industry experts noted that motor insurance companies are among the sectors most directly affected by developments in the automotive market, given the strong link between repair costs, vehicle values, and compensation settlements.
Insurance companies are currently reassessing pricing structures and technical studies related to comprehensive motor insurance policies to maintain profitability and manage claim ratios amid rising repair expenses.
Market observers said luxury and imported vehicles remain among the most affected segments due to the sharp increases in the prices of original spare parts and maintenance services, particularly for brands that rely heavily on imported components.
The return of “overprice” practices during 2026 has also contributed to increasing insured vehicle values, resulting in higher policy costs and larger compensation obligations for insurers in the event of accidents or total losses.
Despite the pressure on costs, insurance companies continue competing aggressively within the motor insurance segment, which remains one of the largest and most active sectors in Egypt’s non-life insurance market.
Analysts expect insurers to increasingly rely on digital claims management systems, AI-powered risk assessment tools, and stricter underwriting standards to improve operational efficiency and limit loss ratios during the coming period.
The Egyptian automotive market has experienced significant fluctuations over recent years due to currency movements, supply chain disruptions, import restrictions, and changing consumer demand patterns, all of which continue to impact related sectors including insurance, financing, and after-sales services.