Automobile insurance premiums and reimbursements rise amid inflation

Major insurance providers in Japan and Germany are adjusting policies and reimbursement practices in response to rising inflation and increased repair costs.

In Japan, Sompo Japan Insurance has announced plans to increase automobile insurance premiums by an average of approximately 5% starting in January 2027. This follows a previous increase in July 2026. The company cited a 7.9% year-on-year rise in repair cost unit prices between April and June 2026, driven by higher parts costs and rising labor expenses due to mechanic shortages. Tokio Marine & Nichido Fire Insurance is also expected to raise premiums by approximately 6.5% in October 2026. The complexity of modern vehicle sensors and advanced driver assistance systems (ADAS) has contributed to higher repair estimates following even minor accidents.

In Germany, insurers are adopting stricter methods to manage loss ratios. Legal analyses indicate that providers are increasingly challenging workshop invoices and utilizing narrower interpretations of “economic total loss” to reduce payouts. Tactics include rejecting current labor rates or insisting on non-original replacement parts. This trend is linked to broader macroeconomic inflation affecting raw materials and specialized automotive labor, often leaving a financial gap for policyholders when insurance payouts fail to cover actual restoration costs.