Cost of living impact apparent in insurance affordability concerns

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According to the Association of British Insurers (ABI), the latest quarter indicates claims inflation is yet to stabilise as the cost of repair, replacement vehicles, and theft are all rising. The ABI suggests that anyone struggling with cost of their cover should speak to their insurer.

Motor insurance affordability was one of three issues highlighted by consumer’s in the ABI’s Financial Inclusion Strategy.

Mervyn Skeet, the ABI’s director of general insurance policy, 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.”

The ABI’s Motor Insurance Tracker analyses almost 28 million policies sold a year and the claims paid against these policies. It is based on the price customers pay for their cover as opposed to what they are quoted.

Motor premiums only increased by 1% in Q1 2024, suggesting an easing of rises in 2023. However, insurers absorb growing costs with the average claim paid rising 8% to reach a record of £4,800, according to the ABI.

The average comprehensive car insurance premium is now £635, up 1% on the previous quarter. Motor insurance has tracked very close to inflation.

Prices are £8 more than the previous ‘peak’ at the end of 2017, partly because of prices falling during the pandemic. From the end of 2017 to now, costs for insurers to pay claims have risen by 23%.

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