Context
The ABI has published the latest data from its Motor Insurance Premium Tracker for the period April to June 2024, which shows that the average motor insurance premium fell by 2% in April to June compared to the first quarter of 2024.
Key points to note and next actions
The cost of claims has had a significant and sustained impact on motor premiums, and this is the first time the quarterly average premium has fallen in two years, now standing at £622. Pressures on claims costs also appear to have eased this quarter, with the average claim paid remaining stable (+0.4%) after an 8% rise in Q1.
Despite the quarterly drop in premiums, on an annual basis, the Q2 2024 figure is 21% higher than the same period in 2023.
The ABI’s latest claims data shows over the last 12 months:
- Insurers paid out £2.9 billion in motor insurance claims (18% higher)
- Repair costs were £1.9 billion (28% higher)
- The average cost of theft of a vehicle fell 10% to £12.1k. However, the average cost of theft from a vehicle hit a record high of £3.1k
2023 was a difficult year for motor insurance margins, with EY estimating that for every £1 collected in premiums, the industry paid out £1.13 in claims and expenses. This follows a similar result in 2022 when the industry paid out £1.11 in claims and expenses for every £1 collected in premiums.
Over the long term and in real terms (accounting for inflation), the average premium paid is now £12 lower than peak prices in Q4 2017. This is a 2% real terms drop, whilst over the same period the average cost of a settled claim has risen by 21%.