Motor insurance coverage prices surge by a fifth with file excessive costing nearly £90 extra
The common worth paid for motor insurance coverage has surged by simply over a fifth (21 worth), or almost £90 in money phrases, over the previous yr, to achieve the very best ranges since data began in 2012.
An evaluation of 28 million motor insurance coverage insurance policies discovered the typical worth paid within the second quarter of 2023 was £511, up seven % from the earlier quarter.
The Association of British Insurers (ABI) stated “sustained cost pressures” is what has pushed the value of motor insurance coverage to file highs.
Combining all motor insurance coverage claims, insurers paid out paid out a complete of £2.4 billion for theft, automobile repairs, and private damage – within the first quarter of this yr, they stated.
The common premium paid for personal complete motor insurance coverage within the second quarter of 2023 was up seven % on the earlier quarter.
In the second quarter of 2022, the typical worth paid for motor insurance coverage was at £423, nevertheless within the second quarter of 2023, it was £511, up £88.
The ABI stated “sustained cost pressures” confronted by insurers, reminiscent of automobile repairs, power prices and labour charges, have pushed up the value of motor insurance coverage.
This was a 14 % improve in contrast with the primary quarter of 2022.
With the price of dwelling closely inflated over the previous yr, power, repairs and elements have continued to rise at a speedy tempo.
In the previous yr, automobile repairs have elevated by 33 %, reaching a complete of £1.5 billion – the very best determine because the ABI began amassing this information again in 2013, and the prices of alternative elements for a lot of in style vehicles have elevated by as a lot as a fifth.
One insurer had even noticed a 40 % rise in labour charges between June 2022 and January this yr.
They urged anybody involved about having the ability to afford their insurance coverage to talk to their motor insurer to see what choices is likely to be accessible.
The ABI’s newest tracker reveals that within the second quarter of this yr, the typical worth paid by motorists renewing their cowl rose by £36 on the earlier quarter to £471, whereas the typical premium for a brand new coverage was up by £21 to £566.
These figures replicate the completely different danger profile of latest and renewing prospects. For instance, a brand new buyer could also be extra prone to be a youthful, much less skilled driver, the ABI stated.
Financial Conduct Authority (FCA) guidelines on the pricing of motor and residential insurance coverage launched final yr guarantee the value paid by renewing prospects is not any better than that charged to an equal new buyer for the same coverage purchased by the identical distribution channel.
But the foundations don’t set or cap the extent of premium paid.
Mervyn Skeet, the ABI’s director of basic insurance coverage coverage, stated: “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.
“We would urge anyone concerned about being able to afford their insurance to speak to their motor insurer to see what options might be available. And despite cost pressures, it can still pay to shop around to get the policy that best meets your needs at the most competitive price.”