The Association of British Insurers (ABI) has released the latest data on motor insurance premiums, revealing a key change not seen in the UK market over the past two years.
Based on ABI’s records, the average cost of motor insurance saw a 2% decline during the second quarter of 2024 compared to the previous quarter. This marks the first decrease in quarterly premiums in two years, with the average price now at £622.
However, despite the quarterly fall, premiums are still higher compared to the same period last year. The second quarter posted a 21% jump in premiums compared to Q2 2023.
Claims-wise, insurers paid out a total of £2.9 billion in motor insurance claims, marking an 18% climb from the £2.5 billion paid in last year’s Q2.
“After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as recent claims costs stabilise,” ABI general insurance policy director Mervyn Skeet (pictured) stated.
“While this is good news, we need to continue our work focussing on claims costs, for the good of consumers. It remains a top priority for us and our member insurers.”
The data release comes ahead of the unveiling of the government’s plan to improve the affordability of motor insurance in the UK. It was recently reported that new Transport Secretary Louise Haigh will soon be revealing a motor insurance costs crackdown.
The government move will support initiatives already taken by insurers. Earlier this year, the ABI introduced the industry’s action plan aimed at reducing insurance costs for motorists, as well as premium finance principles designed to offer clarity on what constitutes fair practice in monthly charging.
Additionally, the association is looking at how social policies might help low-income individuals manage their insurance costs.
Meanwhile, commenting on the new ABI data, Consumer Intelligence chief executive Ian Hughes noted: “Our tracking of new business and renewal premiums indicates a continuing downward trend, with a slightly more marked decline in inflation for renewal business than for new business.
“This may lead to a slowdown in shopping around over the next few months. This comes when some insurers call for pricing discipline to recover core operating ration losses from previous years, while others are seizing the opportunity to gain market volume.
“Additionally, some insurers expect a favourable change to the Ogden rate which sets payouts for personal injuries… and are pricing that into new business and renewals.”
What do you think about this story? Share your thoughts in the comments below.
