New framework agreement on motor insurance

The Icelandic Financial Management Authority has concluded a new framework agreement on compulsory insurance against civil liability for vehicles owned by the State pursuant to the tender no. 23169. The most cost-effective tender from Sjóvá was accepted and the contract was signed on 26 August 2025.

The annual contributions from the State are reduced from ISK 146 million to ISK 96 million – savings of ISK 50 million per year and up to ISK 200 million over a four-year period. Given that no framework agreement was in place, the savings are estimated to be up to ISK 416 million.

Of the 69 government agencies with vehicles, 63 will see their contributions reduced. The Road Administration will see its contributions decrease the most in ISK, by ISK 12.23 million per year. Only six agencies see an increase, of which the largest increase is ISK 460 thousand per year.

The new methodology has managed to reduce risk for the insurance companies, promote a fairer distribution of premiums and create incentives for agencies to reduce damages. This means a significantly better treatment for the State.

The contract is valid for two years with the possibility of being renewed twice for one year at a time.