Following last year’s 25% rise in motor insurance premiums, the UK insurance sector is embarking on a comprehensive strategy to mitigate costs.
The Association of British Insurers (ABI), which held its annual conference on Tuesday, released an action plan aimed at reducing insurance costs for motorists. The measures, which could be initiated or enhanced by the industry, government, or regulatory bodies, span from implementing graduated drivers licensing for safer driving, advocating for the reduction of the insurance premium tax (IPT), to enhancing consumer access to pricing data.
Insurance companies are also pledging to provide clearer explanations of premium calculations and ways to lower costs, enhancing transparency throughout the buying process and at renewal times.
Another aspect under scrutiny is premium finance, which offers a monthly payment option for consumers. It was noted that discussions with the Financial Conduct Authority (FCA) and insurers are ongoing to explore potential actions in this area, including possible collaborations with finance houses and brokers outside of ABI’s direct influence.
Mervyn Skeet, ABI’s director of general insurance policy, declared: “We know that insurance costs are putting strain on household finances, so we’ve been working hard to find solutions. Some of these actions we can do quickly; others will require time or assistance from the regulator or UK governments.
“Regardless, we will continue to do what we can under our new strategy to help consumers access the products that are integral to financial wellbeing and play a key role in the nation’s financial resilience.”
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, welcomed the ABI’s efforts but expressed concerns over some proposals, particularly those potentially reducing support for severely injured individuals. He advocated for greater transparency in insurance pricing to address the supposed trust deficit in the industry.
Consumer Intelligence chief executive Ian Hughes, meanwhile, praised the “very welcome” ABI roadmap for addressing insurance costs, highlighting the need for government and regulatory support, especially for young drivers. Similarly, Mark Pallas, associate director at accident management company Winn Group, acknowledged the significance of the “timely” initiative, emphasizing the importance of collaboration among all stakeholders.
Meanwhile Chartered Insurance Institute veteran Branko Bjelobaba, who was pleased to hear about the action plan, had this to say on the subject of premium finance: “If some firms think overcharging is OK, especially in a cost-of-living crisis, then they should think again and be prepared to justify all earnings. Insurers and premium finance providers have to engage robustly with brokers to ensure that the overall package then passes the FVA (fair value assessment), as otherwise they may be complicit in any overcharging.”
What do you think about this story? Share your thoughts in the comments below.
