Claims costs to blame for record motor premiums, say insurers
By John Hyde >>
(14 August 2023)
Insurers say the record cost of premiums can be linked to a 14% increase in payouts for motor claims in the first quarter of this year.
The Association of British Insurers said today that the average premium paid for comprehensive cover had reached £511, up 7% on the previous quarter.
The current average premium is 21% higher compared to the same period last year and is at its highest since the ABI started collecting this data back in 2012.
The number of low-value motor claims has come down steeply in the last two years since the implementation of the Official Injury Claim whiplash portal, but insurance chiefs say they paid out £2.4bn in all motor claims through theft, vehicle repairs, and personal injury in the first three months of this year.
The principal cause has been that the costs of vehicle repairs leapt by 33% over the year to £1.5bn, the highest figure ever recorded by the ABI.
Mervyn Skeet, the ABI’s director of general insurance policy, said: ‘These continue to be tough times for many motorists and motor insurers alike. With many families facing higher cost of living bills, no one wants to see the cost of their motor insurance rise.
‘Insurers remain determined to ensure that motor insurance remains as competitively priced as possible, but this has become increasingly challenging, given the continued rising costs that they are facing.’
The government had promised that motorists would save up to £35 a year on their insurance when new rules came into force in 2021 following the Civil Liability Act.
This pledge will begin to come under scrutiny in the next year. The legislation includes provision for the Treasury to require insurers to provide information on how its has affected motorists. In particular, from April 2024 the Treasury will have a year to prepare and lay before parliament a report giving a view on whether motorists have benefitted from any reductions in costs.
Figures released by the Compensation Recovery Unit through a freedom of information request show that the number of motor claims fell from around 667,000 in 2018 to 370,000 in 2022. Figures have continued to come down in the first two quarters of this year.
Matthew Maxwell Scott, executive director of the claimant-focused Association of Consumer Support Organisations, said: ‘While people are still getting injured in regrettably large numbers on our roads, many are not seeking out the redress available to them, including the rehabilitation they might need. In a period of rapidly increasing motor insurance premiums, it is difficult to see how any of this is a win for consumers, especially injured ones.’
(Courtesy: The Law Society Gazette)