Context
The ABI has set out the steps the industry is taking to combat the rise in the cost of motor insurance at their conference in February. Motor insurance costs have been a particular focus after claims inflation led to the cost of premiums rising 25% in 2023.
Key points to note and next actions
The ABI sees a focus on premium finance as an important part of its work to combat the rise in the cost of motor insurance and, while a voluntary industry-led cap on premium finance charges was considered and discussed with the FCA, the principles represent what is possible within the limits allowed by competition laws and provide a basis for firms to take meaningful action.
The five elements of the Premium Finance Principles are;
- Transparency
- Affordability
- Fair value
- Proportionality
- Accountability
The ABI has committed to publish a report by Summer 2025 on the impact of these principles on premium finance for motor insurance customers.
Motor insurance affordability is one of three highlighted consumer issues in the ABI’s Financial Inclusion Strategy.