Despite increasing cost pressures, the average price paid for motor insurance in the third quarter of the year remained flat, as drivers continued to benefit from a competitive motor insurance market, according to the ABI’s latest Motor Insurance Premium Tracker out today. The Tracker is the only survey that looks at the price consumers pay for their cover, rather than the price they are quoted.
Today’s figures show that:
- the average price paid for motor insurance in the third quarter of the year, at £468, fell marginally by £1 on the second quarter;
- the average premium paid fell by £3 on the same quarter last year.
However, cost pressures continue to build, including:
- The Government’s changes to the Personal Injury Discount Rate, (a formula used to help calculate high value personal injury compensation awards) in July, will further add to insurers’ costs, and put more pressure on premiums, especially for higher risks, such as young drivers.
- Repair costs are rising, reflecting ever more sophisticated vehicle design and technology which in most cases are more expensive to repair when damaged. In the first half of the year, the repair bill for insurers, at £2.3 billion, rose by 11% on the same period last year. The low value of the pound is also impacting on the cost of spare parts bought overseas.
- In the half of the year, the cost of theft was up by 18% on the same period last year to £211 million. This reflects Home Office figures recording a rise in vehicle thefts over the last five years. The increase is believed to being driven, in part, by keyless car crime.
Mark Shepherd, ABI’s Assistant Director, Head of General Insurance Policy, said:
“Motorists continue to get competitively priced motor insurance deals, but cost pressures remain. This summer’s Discount Rate change will do nothing but add to the cost pressures already being felt by insurers from more expensive vehicle repairs and theft claims. This makes it more important than ever that the whiplash reforms in the Civil Liability Act are implemented on time and in full. Now is also the right time to consider reducing the rate of Insurance Premium Tax, which has doubled to 12% over the last four years.”
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Notes for Editors
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