Motor premiums up by 8% in Q4 2022 – ABI

The average price paid for a private motor insurance premium increased by 8% to £470 in Q4 2022, according to the ABI’s latest Motor insurance premium tracker. 

Published today (3 January 2022), the tracker also confirmed that motor insurance premiums were being impacted by the price of paint and materials rising by 16%.

Since Q3 2021, the price of paint has increased by 20% to the equivalent quarter in 2022.

An estimated 40% of all motor remediation work is now being impacted in some way by delays for parts, added the ABI.

In addition to this, energy cost inflation added £71.75 to each repair.

The ABI tracker examined the prices consumers paid for premiums, instead of prices quoted.

Jonathan Fong, ABI’s senior policy adviser for general insurance, said every motorist was seeking the “best insurance deal” amid cost of living pressures.

He continued: “Insurers continue to do all they can to keep motor insurance as competitively priced as possible.

”Yet, like many other sectors, insurers continue to face higher costs – more expensive raw materials, which are becoming increasingly challenging to absorb.”

Fong urged motorists concerned about pricing to speak to their insurers.

FCA pricing reforms

The changes in pricing during 2022 reflect the introduction of the FCA’s pricing reform and move towards fair value.

On 1 January 2022 the FCA introduced new rules on motor and home insurance pricing to ensure the price paid by renewing customers was not greater than the total an equivalent new customer would pay via the same distribution channel.

In Q4 2022, the ABI’s tracker revealed the average price paid for a new policy increased by 7% – a rise of £37 – to £531 in total, a record high.

Meanwhile, for motor premiums that were renewed the average cost increased by 8%, or £31, taking it to £438.

The average price paid to renew an existing policy in 2022 fell by 7% to £392, compared to the previous year.

However, the average price paid for new policies increased by 11% to £500.

For Nick Kelsall, head of motor claims at Allianz Commercial, the findings confirm the impact of cost pressures.

The insurer has been encouraging customers to use its approved repairer network (ARN) to help keep repair times and claims costs down.

Allianz’s claims process uses an omnichannel FNOL (first notification of loss) process and the insurer will be unveiling additional incentives for its fleet customers who use the ARN.

Kelsall added: “With some delays being linked to parts shortages, the use of green parts can help avoid those delays – it also saves costs and emissions.

“We will continue to look at innovative ways to buck the inflationary trend, but for the moment we believe the best answer is through claims efficiency, approved repairs and green parts.”