’Inflation might be easing, but the crippling costs of car insurance are only getting worse,’ says party’s economy spokesperson
The Scottish National Party (SNP) has urged the UK’s Labour government and chancellor Rachel Reeves to “get a grip on the costs of UK car insurance” at the upcoming budget.
In an SNP commissioned analysis, which was carried out by the House of Commons Library, findings revealed that, between May 2021 and July 2024, average UK car insurance premiums rose by 82% – it only rose by 19% in neighbouring EU countries over the same period.
Between August 2022 and August 2023, the research also showed that motor insurance costs grew by 29% in the UK – and by 38% between August 2023 and 2024.
In a report from the Daily Record, SNP economy spokesperson Dave Doogan was quoted as saying: “ It’s time for the Labour government to get a grip on the soaring costs of a UK car insurance industry where prices always rise like a rocket, but fall like a feather.
“Inflation might be easing, but the crippling costs of car insurance are only getting worse – and now it’s in danger of being locked in permanently.”
The SNPs message follows yesterday’s (16 October 2024) announcement from the Labour government that it would launch a new taskforce designed to bring down the price of motor cover.
Election promises
Doogan said: ”At the general election, the Labour Party promised voters it would tackle the soaring cost of car insurance. “The UK budget will be the test of whether it will honour that pledge.”
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The most recent ABI Motor Insurance Premium Tracker, published in Summer (5 August 2024), showed that the average motor insurance premium paid by UK customers fell by 2% quarter-on-quarter in Q2 2024 – the first decrease in two years.
However, Doogan added: “After the massive 82% rise in car insurance over the last three years, smaller price rises won’t cut it for consumers. It’s time for car insurance costs to finally come down.”
Commenting on the launch of the government taskforce yesterday, Allianz UK chief executive Colm Holmes said the “cost of insurance has become a headache for many motorists who are struggling with wider cost of living pressures”.
He added: “The problem is compounded by a range of factors, including an increase in the number of accidents in recent years, the cost of repair rising at above the inflation rate, the prevalence of insurance fraud and motor theft, as well as the poor disrepair of our roads.”
PwC UK’s head of general insurance Mohammad Khan, added: ”As car insurance is a legal requirement, taking steps to ensure the market is fair, competitive and affordable is the right thing to do.
“There are a number of reasons motor insurance currently costs more in the UK and why car insurance rose more than in other European countries over the last year and a half.
”These include supply chain-led claims inflation – which has been as high as 30% per annum and much higher than CPI – and tariff costs on the products and services required for car repairs, with the majority of car parts coming from outside of the UK, which makes them susceptible to the rising price of fuel required to import goods by ship seen over the past few years.
”The UK has also seen several increases in the insurance premium tax in recent years, which has been added on to bills.”
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