The average motor insurance premium fell by 2% in July to September to £612, according to the latest data from the Association of British Insurers (ABI).1 This is the second consecutive quarter the price of premiums has fallen, following a 2% drop in Q2 2024.
Despite the quarterly drop, the average cost of motor insurance in the third quarter of this year was £50 (9%) higher than the same period in 2023. This year-on-year increase is due to the significant and sustained cost pressures insurers are experiencing, as a result of record claims costs and broader price inflation.
Our latest claims data shows:
- In total, insurers paid out £2.9 billion in motor insurance claims in Q3 2024 – up 14% on £2.5 billion paid in the same period last year.
- While the average claim paid remained stable from Q2 2024 to Q3 2024 at a value of £4.8k, it was 8% higher than Q3 2023.
- Repair costs totalled £2 billion for the quarter, which is 26% higher than Q3 2023.
- The average claim for theft of a vehicle dropped in Q3 2024 by 7% compared to Q3 2023 to £12.2k, but theft from a vehicle increased by 17% to £3k.
When adjusting for inflation, the average premium paid is now £23 lower than peak prices in Q4 2017. Inflation adjusted data shows what historic costs would have been if they faced the same inflationary pressures we're experiencing today, uncovering the real growth or decline. Therefore, over the long term and in real terms, the average premium is 4% cheaper compared to peak prices, while the average cost of a settled claim is 21% more expensive.
2023 was a difficult year for motor insurance margins, with EY estimating that for every £1 collected in premiums, the industry paid out £1.13 in claims and expenses.2 This follows a similar result in 2022 when the industry paid out £1.11 in claims and expenses for every £1 collected in premiums.
Action on motor premiums
Building on the ABI’s existing work to combat the cost of motor cover, which includes its 10-Point Roadmap and Premium Finance Principles,3 the trade body is working alongside consumer groups as part of a stakeholder panel, advising the government’s newly established motor insurance taskforce.
Mervyn Skeet, ABI Director of General Insurance Policy, said:
“While our latest figures show the second consecutive quarterly drop in average motor insurance premiums, we know that the industry continues to face significant cost pressures, and the price of cover remains a strain on household finances. We remain determined to do all we can to support motorists. As part of this, we’re committed to playing our part in supporting the government’s taskforce, and we look forward to bringing our ideas and expertise to the table, contributing to this initiative on behalf of our members.”
Notes for Editors:
Footnotes
- The ABI’s Motor Insurance Premium Tracker is the most comprehensive in the UK, analysing nearly 28 million policies sold a year. It’s also the only collection that is based on the price customers pay for their cover rather than what they are quoted (which typically delivers higher averages). More on this in our blog.
- https://www.ft.com/content/6794770b-d3e5-4faf-848c-77ceee2e2dac
https://www.ft.com/content/bbfdd270-b05f-466b-8d59-9c3554d2e767
- This year, ABI launched its 10-Point Roadmap, which outlines a combination of actions that industry, government or regulators could initiate or improve on to help tackle insurance costs. Such steps include making more information available to consumers, improving road safety and cutting Insurance Premium Tax. The ABI also recently launched its Premium Finance Principles, which aim to help those who pay-monthly for motor insurance by underlining what fair practice on charging for pay-monthly should look like. The trade body has also commissioned research to explore how various social policies or initiatives could help people on low incomes manage their insurance costs.