Motor premiums rise in Q2 2023 amid ’soaring cost of claims’ – Pearson Ham

Pearson Ham has warned of “drastic impacts” to premiums as it revealed that motor insurance prices increased month-on-month in the second quarter of 2023.

In a statement released yesterday (12 July 2023), the pricing consultancy said car insurance prices rose by over 14% between April and June, with price increases taking place every month.

It added that price increases over the year resulted in the most competitive car insurance prices now being almost 30% higher than last year.

These are the largest increases Pearson Ham has seen since it began measuring in 2019.

Home insurance

The firm obtained the figures using its latest quarterly insurance price index for Q2 2023.

It also found combined buildings and contents home insurance premiums grew by around 21% compared to last year, accelerated by a 7.6% increase in Q2 2023.

Speaking about price rises in both the home and motor sector, Stephen Kennedy, insurance pricing director at Pearson Ham, said: “The reasons behind this significant increase are due to the soaring cost of claims, but pricing growth of almost a third will undoubtedly intensify the level of scrutiny applied to insurers.

“Especially as indicators suggest that the trend of rising premiums will continue, at least in the short term.”

Inflation

It came as law company Ernst and Young (EY) said that should motor insurers make the necessary adjustments to premium prices to keep pace with the rate of inflation, the market should return to a profitable net combined ratio of 97.4% next year.

Richard Reed, head of UK general insurance at EY, warned last month (26 June 2023) that ”the need for the sector to address this and rebalance its books unfortunately means that consumers will face a sharp rise in their premiums”.

“2023 will undoubtedly be tough for consumers and insurers alike, but we expect these challenges to ease once inflation falls back,” he said.