UK insurers have revealed the quantity they paid out for motor claims went up by about 18% final yr, whilst British drivers confronted premium will increase of greater than a 3rd – far above the rises in the remainder of Europe.
The Affiliation of British Insurers (ABI) put the common enhance for automotive cowl within the UK at 34%, however many drivers have seen rises far exceed that, even doubling within the case of electrical autos (EVs).
In contrast, automotive premiums over the identical interval rose by 6% in Italy, 5% in Spain and a couple of% in France, in keeping with the current monetary outcomes of one in every of Britain’s largest insurers Admiral, which additionally trades in Europe.
The ABI’s admission that UK automotive insurance coverage payouts have lagged far behind the rising price of canopy may result in renewed requires an investigation into whether or not drivers in Britain have been taken for a experience.
In current months, the Guardian has been inundated with messages from drivers who’ve been despatched automotive insurance coverage renewals 50% larger than a yr in the past.
The steep rise in motor premiums has been cited as a number one contributor to the price of residing disaster, and has even compelled some motorists on low incomes to surrender their autos. UK house owners of EVs have complained that their insurance coverage has doubled within the final 12 months, with some going through payments of £5,000 or extra.
In Germany, the most important European automotive market, automotive premiums have risen by 11% to 13%, in keeping with stories – a bigger enhance than in its European neighbours however nonetheless nowhere close to the rises imposed on British drivers.
The ABI has put out countless press releases to justify the soar in UK premiums. In its newest figures on Saturday, it mentioned automobile restore prices jumped 31% in 2023, payouts after automobile thefts jumped 23%, whereas price of offering momentary alternative autos leapt 35%.
Nevertheless, it additionally revealed that whole UK payouts for claims solely rose 17.85%, suggesting that insurers have been utilizing the massive soar in inflation as a canopy to extend margins. The ABI mentioned insurers paid out £9.9bn for motor claims final yr – up from £8.4bn in 2022.
Each the European comparability and the ABI’s most up-to-date information will solely add to calls on regulators to look at whether or not British drivers have been overcharged. The Monetary Conduct Authority has to date dominated out a full investigation into the market, regardless of calls in parliament and elsewhere.
“Whereas we don’t set or management insurance coverage costs, we’re monitoring the motor insurance coverage market carefully to make sure prospects are receiving truthful worth,” the regulator mentioned in March.
Carla Lockhart MP is amongst those that have referred to as on the federal government to press for “nearer scrutiny of the trade”. Lockhart instructed a parliamentary debate that her constituents have been up in arms at “the exorbitant price” of insurance coverage.
Jonathan Fong, the ABI’s supervisor for common insurance coverage coverage, mentioned: “Vital and sustained price pressures confronted by insurers, comparable to a 31% rise in restore prices during the last yr, have impacted on the price of cowl.
“Regardless of this, insurers proceed to do all they will to make sure competitively priced motor insurance coverage. By our just lately revealed roadmap, the trade is working laborious to fight rising motor insurance coverage prices. And it will probably nonetheless pay to buy round to get the coverage that greatest meets your wants on the best worth.”
Admiral mentioned that UK automotive insurance coverage premiums are larger within the UK than different EU nations due to limitless legal responsibility. “Harm claims throughout the nations are completely different and topic to completely different drivers of inflation and Italy, Spain and France noticed completely different levels of inflation in contrast with the UK and have completely different constructions,” it mentioned.
