Senior policy advisor says insurers are doing ’all they can to keep motor insurance as competitively priced as possible’
The average price paid for motor insurance increased in the first quarter of 2023 as insurers faced above inflation cost increases, according to new data.
The Association of British Insurers (ABI) has released the latest findings from its Motor Insurance Premium Tracker, which looked at the price consumers pay for their cover rather than the price they are quoted.
Published last week (12 May 2023), the data revealed the overall average premium paid for private comprehensive motor insurance was £478 in Q1 2023, up 2% on the previous quarter.
The current average premium was also 16% higher compared to Q1 2022 and at its highest since Q4 2019.
Meanwhile, the average price paid by motorists renewing their cover rose by £8 to £436, while the average premium for a new policy was up £14 to £545.
“The rise reflects above inflation cost pressures motor insurers continue to face, such as higher raw material costs for vehicle repairs,” the ABI said.
It noted that other cost pressures cited by some of its members included energy inflation adding to each repair and courtesy car costs to repairers increasing at around 30%.
’Higher costs’
The ABI said that FCA rules on the pricing of motor and home insurance meant that the price paid by renewing customers was no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel.
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“However, the rules do not set or cap the level of premium paid by new or existing customers,” it added.
“The price of cover will continue to reflect a range of factors, including the cost of settling claims.”
Jonathan Fong, senior policy adviser for motor insurance at the ABI, said insurers were doing “all they can to keep motor insurance as competitively priced as possible”.
“Yet, like many other sectors, insurers continue to face higher costs,” he added.
“The price of certain raw materials and energy costs are rising at rates well above general inflation and these costs are becoming increasingly challenging to absorb.”
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