Numbers from the Association of British Insurers (ABI) Motor Insurance Tracker for the first quarter of 2024 point to an easing of increases. According to the ABI, the average cost for comprehensive car insurance in Q1 rose by 1%, to £635, compared to the corresponding amount for the last three months of 2023.
“Over the long-term, motor insurance has tracked very close to inflation,” the trade body reported. “In real terms, prices are just £8 more (+1.3%) when compared to the previous ‘peak’ at the end of 2017. This is partly because prices fell significantly during the pandemic.
“In contrast, over the same period (end 2017 to now), costs for insurers to pay claims have risen by 23% in real terms. 2023 was a difficult year for motor insurance margins, with EY estimating that for every £1 collected in premiums, the industry paid out £1.14 in claims and expenses.”
The average payout for claims in the first quarter of this year climbed 8% to a record £4,800.
“We understand that car insurance costs are putting pressure on household finances,” ABI general insurance policy director Mervyn Skeet (pictured) said. “These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable.
“Even though these figures demonstrate a slowdown in price increases, we won’t be taking our foot off the gas when it comes to our work on tackling the cost of cover.”
Last week, the ABI unveiled its Premium Finance Principles as part of the trade body’s action plan against rising motor insurance costs.
The Premium Finance Principles are centred on transparency, affordability, fair value, proportionality, and accountability. They aim to ensure, among other things, that the charges are reasonable and are regularly reviewed.
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