Mexico Auto Insurance Costs Surge, Outpacing Inflation

Automobile insurance costs in Mexico have surged significantly, rising more than twice as fast as the country’s inflation rate from Dec. 1, 2018, to the end of July 2024. According to the National Institute of Statistics and Geography (INEGI), the average insurance premium has increased by 69%, compared to a cumulative inflation rate of 32.9% over the same period.

The current increase is being driven by several factors, including a rise in traffic accidents, higher vehicle sales, increased car values, and the growing cost of imported auto parts.

"The frequency of traffic accidents has gone up by more than 17% in the first half of 2024, so it’s expected that insurance rates would follow suit,” said Miguel Romero, Insurance Brokerage Specialist, AARCO.

The National Insurance and Bonding Commission (CNSF )reported a 22.5% growth in auto insurance placements by the end of the first half of 2024. This growth is being fueled largely by higher vehicle sales and the increased cost pressures consumers face from rising auto part prices and accident rates.

“The current situation with Chinese vehicles is not entirely favorable, as many of these brands don’t have adequate parts in stock or specialized workshops for repairs. Insurers are considering this, often limiting coverage for damage payments,” Romero added.

This presents a significant challenge for consumers, particularly when it comes to ensuring that their vehicles can be properly serviced and repaired after an accident. While insurers are willing to cover Chinese vehicles, the shortage of available parts may cause delays, potentially frustrating policyholders.

“All Chinese brands can be insured without issue. However, the problem arises with servicing. If the dealership does not have the necessary parts, that’s not the insurer’s responsibility. The vehicle will be insured, and if an accident happens, the insurer will pay for the repairs. But if parts are not available, the customer will have to wait for them to be sourced, which could lead to dissatisfaction,” Romero explained.

He also recommended that consumers explore alternative insurance options when renewing their policies, noting the wide range of offerings available and the different risk assessments made by insurers depending on the make and model of the vehicle.

“The rise in auto insurance premiums is largely due to two factors. First, inflation in this sector tends to be higher than in the basic goods basket, driven by the cost of imported auto parts. Second, accident rates are up. As long as we continue to have unsafe roads and vehicle thefts, insurers will be forced to raise premiums to cover potential losses,” said Alejandro Sobera, President, Automobile Committee of the Mexican Association of Insurance and Bonding Agents (AMASFAC).