Vida FatemiABI’s Motor Insurance Tracker shows the average price paid for motor insurance has continued to rise. The cost to insurers to pay claims is main cause of these rises.
The Tracker shows that between 1 October and 31 December 2023:
- £627 was the average premium paid for private motor insurance, up 12% on the previous quarter;
- the current average premium is 34% higher compared to Q4 2022;
- motor premiums were 25% more expensive on average across 2023 compared to 2022.
Insurers are spending more on claims and costs than they are collecting premiums. Insurer costs include:
- payouts for vehicle thefts (35% rise in Q3 2023 vs Q3 2022);
- providing replacement vehicles (up 47% in the same period due to longer repair times);
- replacing written-off vehicles (up 43% over a 5-year period due to rise in cost of new cars).
Repair is the largest cost (up 32% in Q3 to £1.6bn of the total £2.54bn) due to the cost of labour, energy and expertise needed to fix sophisticated cars (e.g. electric cars).