Vitality announces it will leave car insurance market

Vitality has revealed that it is exiting the personal lines motor market due to economic headwinds.

In a statement on its website, the insurer said that it would not offer new policies to consumers following “unprecedented claims inflation” within the car insurance market.

“[This has led] to significant price increases,” the insurer said.

The ABI revealed earlier this year (11 August 2023) that insurers paid out £2.4bn in all motor insurance claims – including theft, vehicle repairs and personal injury – in the first quarter of this year, up 14% from Q1 2022.

It added that the cost of vehicle repairs had leapt by 33% year-on-year to £1.5bn, the highest figure since the ABI started collecting this data back in 2013.

“[Price rises have] impacted our ability to deliver appropriate value for good drivers. Because of this, we are no longer offering new car insurance policies,” Vitality added.

”We are continuing to cover our existing customers for the remainder of their plan.”

Other exits

Vitality is not the first insurer to make such a move – earlier this year (28 March 2023), RSA Insurance announced it would exit the UK personal lines motor market after conducting a “thorough review” of its business.

Then, just over three months later (13 July 2023), Zurich UK revealed plans to refocus its personal lines home and motor business to concentrate on the high-net-worth (HNW) market and proposed to withdraw from the regional and national broker channels.

Both announcements cited the competitive nature of the market as part of the reasons for decisions that had been made.

As a result of increased pressures and economic headwinds, Stephen Kennedy, director of insurance pricing at pricing consultancy Pearson Ham, said he could understand why insurers could find it difficult to be competitive in the sector.

“The pressure of additional regulations, the spiralling cost of claims, the tough market and the way pricing needs to be done makes it quite difficult to be able to compete,” he said.

“So, I can understand some of the reasons why people might see this as the right time to get out.”