Labour calls for investigation into ‘out of control’ car insurance premiums

Shadow transport secretary Louise Haigh has said Labour would call on regulators to investigate increasing car insurance premiums.

Ahead of the July general election, Haigh said premiums were currently “out of control” and that there needed to be a clamp down on “any unfair practices”.

She made the comments after figures from Confused.com and WTW showed that car insurance premiums saw an annual rise of 43% (£284) from Q1 2023 to Q1 2024.

The rise comes 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.

And from the end of 2017 to present, costs for insurers to pay claims have risen by 23%, according to the ABI.

However, Haigh said that regulators, such as the FCA and Competition and Markets Authority, needed to investigate the sector.

“Car insurance is a legal requirement and an essential – not a luxury. Labour won’t sit back and watch while drivers are punished by the out of control cost of cover,” she told The Mirror

“We will urgently call in the regulators to crack down on any unfair practices and to come clean on the causes of soaring costs for consumers.”

What the ABI says

While car insurance premiums have risen over the last couple of years, figures from the ABI show that there was a minimal increase during the first quarter of 2024.

It revealed that the average comprehensive car insurance premium sat at £635 between January and March 2024, up just 1% from the previous quarter.

Mervyn Skeet, the ABI’s director of general insurance policy, said the figures demonstrated that the motor market was competitive as insurers look to keep prices stable despite incurring higher costs.

“These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable,” he said.

“Even though these figures demonstrate a slowdown in price increases, we won’t be taking our foot off the gas when it comes to our work on tackling the cost of cover.”

The ABI set out the steps the industry was taking to combat the rise in the cost of motor insurance at its conference in February 2024.

It also announced that its members had agreed a set of principles on premium finance, aimed at managing the cost associated with paying for insurance on a monthly basis.