Insurance Prices On The Rise

One of the UK’s leading motor insurance groups has published findings which show that the cost of living crisis is hitting insurance premiums hard, with premiums rising at a rate higher than inflation.

The Association of British Insurers (ABI) reported that its members are facing challenges in accommodating the increasing expenses related to vehicle repairs and replacements, resulting in a surge in average premiums that exceeds the inflation rate. The mean cost of a fully comprehensive insurance premium has reached £478, representing the highest value observed since the conclusion of 2019.

The industry association reported that its members aimed to provide equitable arrangements for drivers. However, escalating energy expenses for workshops, along with surging paint prices and courtesy car expenditures, were contributing to an increase in repair costs. The escalating cost of claims is being attributed to the persistent increase in used car prices, which have surged by approximately 29% within the past two years.

Q1 2023 data indicates an average policy increase from Q4 2022 to Q1 2023. The renewal cost of a policy increased by £8 to £436, while the price of a new policy rose by £14 to £545 during the same period.

“With households battling the rising cost of living, the last thing anyone wants is a higher motor insurance bill. Naturally, every motorist wants the best insurance deal, and insurers are doing all they can to keep motor insurance as competitively priced as possible,” said Jonathan Fong, senior policy advisor for the ABI.

“Yet, like many other sectors, insurers continue to face higher costs. 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.”