The average cost of car insurance in the UK has continued to rise and has now reached the highest level since records began.
The ABI says the average premium for fully comprehensive car insurance reached £511 in Q2 2023. That’s a hefty quarter-on-quarter increase of 7%.
Even more staggering is the fact the average premium is 21% higher than a year ago.
The average price hike for motorists renewing their car insurance was £36, taking the quarterly average up to £471, while the average premium for a new policy rose £21 to £566.
The analysis is robust, with the ABI surveying 28 million car insurance policies. It says the upward trend is due to sustained cost pressures including a 33% rise in vehicle repair costs.
The figures come after international consultants EY noted the UK motor insurance market “experienced its worst performing year in a decade in 2022”.
For every £1 car insurers received in premiums, they paid out £1.10 in claims and costs.
Rising costs
“These continue to be tough times for many motorists and motor insurers alike,” said ABI director of general insurance policy Mervyn Skeet.
“With many families facing higher cost of living bills, no-one wants to see the cost of their motor insurance rise.
“Insurers remain determined to ensure that motor insurance remains as competitively priced as possible, but this has become increasingly challenging, given the continued rising costs that they are facing.”
Car insurers paid out £2.4 billion to settle claims in Q1 2023. This figure, which includes theft, repairs and personal injury, rose 14% in a year.
The 33% increase in vehicle repair cots takes the figure up to £1.5 billion. It reflects rising costs that include energy inflation and more expensive repairs, says the ABI.
Indeed, one car insurer quoted a 40% rise in labour rates between June 2022 and January 2023. Meanwhile the cost of replacement parts for the UK’s most popular cars has gone up by between 12% and 21% in a year.
The ABI advises motorists struggling with the cost of car insurance to speak with their current insurer – and be sure to shop around.
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