Context
There are many factors that have combined to make things difficult for people right now, along with recent changes to regulation brought in within this last year. The ABI has listened to questions from insurance customers and has tried to answer the most common queries regarding the pricing of motor insurance.
Key points to note
These FAQs are interactive and include a percentage breakdown of the average costs for insurers.
Topics include:
- Is the cost of insurance going up, and if so, why?
- What does insurance price reform have to do with my premium?
- Is it worth shopping around if big discounts for switchers aren’t readily available?
- Why can’t my insurer tell me why my price at renewal has gone up or down?
The ABI also highlight the profits motor insurers make (or don’t make), noting that the average profit margin in motor insurance is fairly small (single digits %). Many insurers operate at a loss on motor cover to keep that customer, so they can offer customers other products like home, pet or travel insurance. Alternatively, an insurer can run at a loss on motor cover but recoup this through investment returns or policy add-ons. Last year (2022) many insurers ran at a loss, in terms of their motor insurance claims vs. premium income.
Next actions
None – for information and awareness.