The UK has witnessed a 1% rise in motor insurance premiums in the first quarter of 2024, according to the Association of British Insurers (ABI).
This slight rise suggests a cooling off from the sharper increases experienced throughout 2023.
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Despite the modest uptick in premiums, insurers are facing escalating costs, with the average claim paid surging by 8% to a record £4,800 during the same timeframe.
This data is derived from ABI’s Motor Insurance Tracker, which scrutinises nearly 28 million policies sold annually and the corresponding claims.
The average comprehensive car insurance premium now stands at £635, reflecting a 1% increase from the last quarter of 2023.
Over the long term, motor insurance costs have closely aligned with inflation rates, the ABI said.
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By GlobalDataWhen adjusted for inflation, current prices are only £8 higher, a 1.3% growth, compared with the previous high at the end of 2017, partly due to significant price reductions during the pandemic.
In contrast, the period from the end of 2017 to the present has seen a 23% real-term increase in the costs insurers incur to settle claims.
ABI’s latest quarterly figures suggest that claims inflation has not yet plateaued, with expenses related to vehicle repairs, replacement vehicles, and theft continuing to escalate.
In response to rising motor insurance costs, the ABI outlined measures to tackle these increases at its conference in February.
Recently, the ABI announced that its members had concurred on a set of principles concerning premium finance, which aims to manage the costs associated with monthly insurance payments.
ABI director of general insurance policy Mervyn Skeet said: “We understand that car insurance costs are putting pressure on household finances. These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable.
“Even though these figures demonstrate a slowdown in price increases, we would not be taking our foot off the gas when it comes to our work on tackling the cost of cover.”
This announcement follows revelations from the UK’s financial services watchdog that a spike in motor insurance costs has led to a surge in consumer complaints, with reasons such as supply chain disruptions and the intricacies of modern vehicles.
