Motor rate jump fuelled by Ogden and IPT, trade body says
The average motor premium hit a new record high of £484 in the second quarter of 2017, according to the ABI’s motor premium tracker.
The rate is 11%, or £48, higher than the rate of £436 in the same quarter of 2016, which the ABI said was the biggest increase since it began tracking private car premiums in 2012.
The ABI’s figures support findings from the Confused/Willis Towers Watson index for the second quarter, although the ABI statistics are based on premiums paid rather than quotes.
The ABI said that the Ogden discount rate cut to minus 0.75% and the most recent rise in Insurance Premium Tax to 12% from 10% had fuelled the motor rate jump.
This comes as the Association of Personal Injury Lawyers has slammed the insurance industry for blaming recent rate hikes on the Ogden change.
The ABI figures also show big month-on-month increases within the second quarter. Rates jumped to £480 in May from £473 in April, and rose again to £498 in June (see chart below).
The ABI said it is publishing the statistics on the day that Parliament is set to censure the government for its handling of the discount rate cut and as a Motion of Regret about the cut is being debated in the House of Lords.
ABI director general Huw Evans said: “This dramatic increase drives home how important it is the Government press ahead with a new framework for the discount rate and call a stop to further hikes in Insurance Premium Tax.
“The UK is one of the most competitive motor insurance markets in the world, but the unprecedented increase in claims costs is driving up prices to record levels.
“Most younger and older drivers are likely to face increases even higher than this, hurting people who can least afford it. Worryingly these increases are unlikely to be the end of the road if reinsurance premiums go up at the end of the year, adding further costs to insurers.”