Motor insurance premiums rise again

The rise in the cost of motor insurance continues, with the ABI’s latest Motor Insurance Premium Tracker showing that they have reached record levels.

According to the tracker, the average motor premium paid rose by 9% in 2017, adding an extra £40 to the average motor insurance policy.

In the fourth quarter of 2017:

• The average price paid for private comprehensive motor insurance was £493. This was the highest quarterly figure since ABI started collecting the data in 2012, up 6% in the same quarter 2016.
• The average premium paid over the whole of 2017 at £481 was 9% higher than the previous year, and the highest since ABI started collecting this data back in 2012. This added an extra £40 to the average premium.
• The average cost of motor cover has leapt by 29% since 2014.

As a result, the ABI is calling on the Government to help reduce the cost of premiums, by:

• Introducing as quickly as possible its reforms to how compensation for large personal injury compensation awards is adjusted (known as the Discount Rate) to ensure a fairer system for claimants and insurance customers.
• Push ahead with reforms to how lower value whiplash-style claims are handled. Since 2013 there has been a rise in these claims reported to the Government’s Compensation Recovery Unit.
• Freezing the rate of Insurance Premium Tax, which currently stands at 12%.

Rob Cummings, ABI’s assistant director, head of Motor and Liability, said: 

“The rising cost of motor insurance shows no sign of abating. Changes to how compensation payouts are calculated, Insurance Premium Tax, more whiplash-style claims and rising repair bills are all piling on the pressure for cash-strapped drivers.

“The Government must urgently bring forward relief for motorists by introducing its reforms to create a fairer compensation system, and tackle low-value whiplash style claims without delay, as well as freezing Insurance Premium Tax. It is time cash-strapped motorists got a break.”

Simon McGinn, general manager, Commercial & Personal at Allianz insurance said:

“With no sign of any movement on the discount rate in 2018, and quite possibly even 2019, this is a very concerning time for customers. We will be having discussions with the broking community about how best to effectively manage the rising costs of personal injury claims. Customers who read about rising insurance costs need to be made aware that the industry is robustly putting across the case for the government to take action.”