Labour guarantees to crack down on ‘unfair’ automotive insurers as quoted costs leap 56%
Labour has called for an investigation into the “out of control” cost of car insurance.
Millions of drivers have been hit by the rocketing price of motor insurance over the past two or three years.
Insurers say they are passing on a sharp rise in the cost of claims, driven by a big increase in everything from car parts to second-hand motors.
Many in the industry insist they have been making a loss on motor policies. But Louise Haigh, the Shadow Transport Secretary, said the Financial Conduct Authority and the Competition and Markets Authority needed to probe the sector.
She said: “Car insurance is a legal requirement and an essential – not a luxury. Labour won’t sit back and watch while drivers are punished by the out-of-control cost of cover.
“We will urgently call in the regulators to crack down on any unfair practices and to come clean on the causes of soaring costs for consumers.”
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The average quoted price of car insurance leapt by 56.4% in the year to February, Consumer Intelligence found. In February, drivers most commonly received an annual quote between £500 and £749 – lower than the 67.2% in the year to the end of November but still the third-highest annual rise recorded since it began tracking data in 2012.
Some insurers have begun to see a bounce back in profits. Admiral, the UK’s biggest motor insurer, made almost £443million last year, up 23% on the previous 12 months.
Admiral chief executive Milena Mondini de Focatiis said in March: “Over the past couple of years, the industry was hit by the worst inflation in recent history and we faced a cost of living crisis in the UK. We maintained pricing discipline and acted ahead of the market to adapt to these trends.”
Aviva recently revealed improving profits margins in its UK insurance market. And motor and home insurer Hastings said profits rose to £32m in the first three months of this year.
The Association of British Insurers said: “The industry is committed to taking action. Insurers are facing rising repair costs and other factors outside of their control, with a study from EY estimating for every £1 motor insurers received in premiums in 2023, they paid out £1.14 in claims and operating costs.”
