Insurers paying out £1.13m every hour in motor claims

Motor insurers paid an average of £1.13m every hour in claims during 2023, new figures from the ABI have revealed.

According to the body’s motor insurance claims tracker, such a number led to £9.9bn being paid out to policyholders last year, up 18% on the £8.4bn in 2022.

The rise came as a result of more theft and repair claims, as well as an increase in the cost for replacement vehicles.

The ABI said that price of vehicle repairs jumped 31% year-on-year to £6.1bn, while payouts for theft of and from a vehicle rose 29% to £669m.

And the cost of providing temporary replacement vehicles leapt 35% to £597m.

However, insurers paid out £2.4bn in personal injury claims in 2023, down 8% on the previous year’s figure of £2.6bn.

Despite this, the latest personal injury claims figure still contributed to the overall £9.9bn payout sum, which is the highest figure annual figure the ABI has seen since the association started collecting this data back in 2013.

Jonathan Fong, the ABI’s manager of general insurance policy, said: “Significant and sustained cost pressures faced by insurers, such as a 31% rise in repair costs over the last year, have impacted on the cost of cover.

“Despite this, insurers continue to do all they can to ensure competitively priced motor insurance.”

Premiums

The ABI noted that when adjusted for inflation, since 2014 the average cost of a car insurance claim has outpaced average premium increases.

For example, figures show that the average total cost of a settled car claim increased by 23% from £3,500 in 2014 to £4,300 in 2023.

Over the same period, the average premium rose by 8%, from £505 to £543.

To help support motorists, the ABI recently published a roadmap aimed at tackling motor insurance costs.

This outlines 10 steps with a combination of actions that industry, government and regulators could initiate or improve on.

“Through our recently published roadmap, the industry is working hard to combat rising motor insurance costs,” Fong said.

“And it can still pay to shop around to get the policy that best meets your needs at the most competitive price.”