Motor premiums fall in Q2 2024 after two years of increases – ABI

The average motor insurance premium paid by customers fell by 2% quarter-on-quarter for the period between April to June (Q2 24) compared to Q1 24, new figures from the ABI have revealed.

According to the body’s Motor Insurance Premium Tracker, despite a significant rise in claims costs over the last few years, prices now seem to be falling and have dropped to an average of £622 – the first decrease in two years.

This small decrease follows a 1% increase in premiums recorded by the ABI for Q1 2024. 

Meanwhile, the average claim paid out by insurers has remained stable in Q2, with some improvement in specific elements of claims costs.

For instance, repair costs increased by 8% in Q2, which is a reduced increase from the 19% seen in Q1.

Mervyn Skeet, director of general insurance policy at ABI, said: “After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as claims costs stabilise.”

Premiums

The ABI’s Motor Insurance Premium Tracker focuses on the actual prices customers pay for their cover, rather than quoted prices that often result in higher averages.

For example, according to the latest Confused.com Car Insurance Price Index, which tracks quoted premiums, prices fell by 6% (£59) in Q2 24 with UK motorists paying £882 on average.

The ABI explained that 2023 was challenging for motor insurance margins, with EY estimating that, for every £1 in premiums collected, the industry paid out £1.13 in claims and expenses.

This mirrors 2022, when the industry paid out £1.11 for every £1 in premiums. Over the long term, and adjusted for inflation, the average premium is now £12 lower than its peak in Q4 2017 – a 2% decrease.

Meanwhile, the average cost of a settled claim has increased by 21% during the same period.

For example, over the past year, insurers paid out £2.9bn in motor claims – an 18% increase from the previous year.

The ABI added that the cost of vehicle repairs increased by 28% to £1.9bn in the previous 12 months.

Skeet said: “We need to continue our work focusing on claims costs, for the good of consumers. It remains a top priority for us and our member insurers.”