Rising price pressures push up the worth of motor insurance coverage

Common worth paid for canopy up by 8%

Insurers doing all they will to supply aggressive offers as price pressures proceed.

The typical worth paid for motor insurance coverage rose by 8% within the fourth quarter of final yr in line with the ABI’s newest Motor Insurance coverage Premium Tracker. The unwelcome, albeit beneath inflation, rise for motorists displays the sustained price pressures confronted by motor insurers.

The ABI’s Tracker is the one survey that appears on the worth customers truly pay for his or her cowl, fairly than the worth they’re quoted.

In accordance with the most recent Tracker, within the fourth quarter of final yr:

The typical premium paid for personal motor was £470 up 8% on the earlier quarter. The present common premium is 7% larger in comparison with This fall 2021,

Rising prices for insurers proceed

Examples of accelerating price pressures cited by some ABI members embrace:

Vitality inflation including £71.75 to every restore.

Common paint and materials prices have elevated by practically 16%.

Evaluating 2022-Q3 with 2021-Q3 the common paint price on restore has elevated by 20%.

An estimated 40% of all work is now being affected in a roundabout way by components delays.

Courtesy automotive prices to repairers are growing at round 30%.

As well as, the common worth of second-hand vehicles elevated by 19% within the yr ending July 2022, (supply: Auto Dealer)

The influence of the FCA pricing reforms

The FCA launched new guidelines on the pricing of motor and residential insurance coverage on 1 January 2022. These be certain that the worth paid by renewing prospects for motor and residential insurance coverage is not any larger than the worth charged to an equal new buyer for the equal coverage purchased via the identical distribution channel, reminiscent of insurer, dealer, or worth comparability web site. Nevertheless, they don’t set or cap the extent of premium paid by new or present prospects. The worth of canopy will proceed to replicate a variety of things, together with the price of settling claims.

The typical worth paid for a brand new coverage through the fourth quarter of 2022 rose by 7% (£37) on the earlier quarter to £531, a file excessive. The typical worth paid on renewal of an present motor coverage elevated 8% (£31) to £428.

Nevertheless, taking 2022 as an entire the common worth paid to resume an present coverage fell by 7% on the earlier yr to £392, whereas the common worth paid for brand spanking new cowl rose by 11% to £500. The adjustments through the yr partly mirrored the introduction of the pricing rule adjustments

Jonathan Fong, Senior Coverage Adviser, Common Insurance coverage, mentioned:

“Each motorist desires the most effective insurance coverage deal, particularly when dealing with price of dwelling pressures, and insurers proceed to do all they will to maintain motor insurance coverage as competitively priced as attainable. But, like many different sectors, insurers proceed to face larger prices, reminiscent of costlier uncooked supplies, which have gotten more and more difficult to soak up.

“Anybody involved about having the ability to proceed paying their motor insurance coverage premium ought to communicate to their insurer about any different fee choices that could be out there.”

For extra data contact ABI Press Workplace.