Insurance industry responds to Labour’s election win and insurance pledges

The insurance industry has highlighted the issues it wants Labour to tackle after the party secured a landslide victory at the general election. 

While 326 seats in the House of Commons are needed for a majority, the party was able to secure more than 400.

It puts an end to 14 years of Conservative rule, with the party losing more than 200 seats compared to 2019.

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (Acso), said he was looking forward to work with Labour to help policyholders, especially in regards to civil justice.

“We congratulate the Labour party and look forward to working with the new chancellor and other policymakers to support consumers in the civil justice system,” he added.

“Labour’s civil justice inheritance is in a poor state. Record waits to get to court, delays in the modernisation programme, long overdue consultation responses and a wholly inconsistent approach to uprating costs and fees means consumers and their representatives have to work in a third rate system that badly needs improving.

“It is troubling that Labour did not refer to civil justice at all in its manifesto, but hopefully due to lack of space rather than lack of attention.

“Getting the system back on its feet will bring dividends in terms of enabling people to get on with their lives, which will help deliver the economic growth the new government has promised.

Car insurance

One of the other big talking points heading into the election was Labour’s view on car insurance, with Louise Haigh saying she would call on regulators to investigate increasing car insurance premiums.

Rises in prices come amid an increase in costs to insurers, with EY estimating that for every £1 collected in premiums, the industry paid out £1.14 in claims and expenses.

To help reduce claims, Labour has also pledged to fix up to 1m more potholes every year.

Martyn Mathews, managing director at SSP Broker, said the party needed to ”drill down into the detail to be able to tackle high motor insurance premiums”.

“Insurance providers are absorbing growing costs with the average motor insurance claim rising 8% to £4,800. I doubt that fixing 1m potholes across England will make a sizeable enough dent in claims costs. But it’s a start,” he added.

“To promise consumers cheaper insurance without having a detailed understanding of the issues faced by insurance providers may have been unwise.

“The costs faced by insurers are manifold – there is no magic wand to deal with the cost of repair, replacement vehicles, theft and fraud. It’s a multilayered problem that needs a multilayered solution.”

Maxwell Scott added: “Labour pledged to launch an investigation into the dysfunction in the motor insurance industry. If it chooses to proceed, this must be with the consumer – be it as a premium holder, taxpayer, defendant or claimant – at its heart, and not cave in to vested interests.

“We plan to lobby the new government to bring civil justice up the political agenda.”

Biba’s view

Meanwhile, Biba called on the government to introduce secondary legislation in relation to the Leasehold Reform Act to allow for broker commissions and fees to be deemed permitted insurance payments as they are now.

Other priorities for the broker body include increasing SME business resilience, improving market capacity issues in Northern Ireland and working with the Labour in relation to their focus on motor insurance premiums.

Chief executive Graeme Trudgill said: “I welcome the opportunity for Biba to continue representing members by working and engaging with the new government.

“Our 2024 manifesto is all about managing risk, increasing resilience and growth, placing the role of insurance brokers at the heart of this.

“We will raise the value of insurance brokers and highlight member issues and our priorities. Above all else, we look forward to showcasing the skills and expertise of the sector in finding solutions to some of the biggest risks we are facing and will face in years to come.”

Julian Hucks, founder and managing director at Starpeak Insurance Solutions, added that Labour’s victory “should be a step in the right direction when it comes to tackling the ongoing issue of underinsurance for small businesses”.

According to Aviva’s Broker Barometer, which was published on 18 April 2024, underinsurance was second on a list of market challenges brokers were concerned about, only behind insurer service.

“SMEs have had a tough few years navigating the cost-of-living crisis and other economic challenges, which has ultimately led to costs being cut,” Hucks said.

“Unfortunately, insurance cover is among the casualties. Labour’s promise to stamp out late payment of invoices to small businesses should result in better cash flow – meaning more businesses will be able to pay for insurance cover on time and protect themselves against potential risk.”