Context
The Association of British Insurers has gathered data which analysed 28 million motor insurance policies. This produced the most accurate picture of what UK motorists are paying for in their cover. The FCA rules on the pricing of motor and home insurance introduced on 1 January 2022 ensure that the price paid by renewing customers is no greater than the price charged to an equivalent new customer (for the equivalent policy bought through the same distribution channel, such as insurer, broker or price comparison website). However, the rules do not set or cap the level of premium paid by new or existing customers.
Key points to note
- The ABI data tracker / index covers over 7 million policies sold during the second quarter, and 28 million policies sold over the last 12 months.
- Unlike other motor insurance price indices, the ABI measured the average price paid, not prices advertised. This may lead to the ABIs figures being lower, as typically a customer is likely to choose a lower quote at renewal or a price towards the lower end of those available at new business.
- Unlike some other trackers, it covers both new and renewing customers.
Higher premiums reflect continued rising costs for insurers:
- In total, insurers paid out £2.4 billon in all motor insurance claims – theft, vehicle repairs, and personal injury – In the first quarter of this year. This was up 14% on Q1 2022.
- The costs of vehicle repairs increased by 33% over the year since Q1 2022 to £1.5 billion, the highest figure since ABI started collecting this data back in 2013. This reflects rising costs, including energy inflation, and more expensive repairs.
- Increases in labour costs were reported, by up to 40%.
- The cost of replacement parts for many popular cars have increased between 12 -21% over the past year.
Next actions
None – for information and awareness.