Car insurance coverage premiums nudge decrease… however are nonetheless up 40% in two years
- Typical driver now pays £612 a year for car insurance, according to the ABI
Car insurance premiums fell 2 per cent between July and September 2024, with the average driver now paying £612 a year for cover.
The latest fall in premiums follows another 2 per cent drop between April and June 2024, according to the Association of British Insurers trade body.
But it will come as little relief to drivers, who are still paying more than 40 per cent extra for car cover than they were two years ago – the typical premium was £436 in summer 2022.
The ABI said that despite the recent drop in prices, premiums remained high due to high claims costs and overall price inflation for insurers and repairers.
It all adds up: The high cost of car insurance adds to the pain felt by overall rising bills
In total, insurers paid out £2.9billion in motor insurance claims in Q3 2024 – up 14 per cent on £2.5billion paid in the same period last year.
While the average claim paid remained stable from Q2 2024 to Q3 2024 at a value of £4,800, it was 8 per cent higher than Q3 2023.
Repair costs totalled £2billion for the quarter, which is 26 per cent higher than Q3 2023.
The average claim for theft of a vehicle dropped in Q3 2024 by 7 per cent compared to Q3 2023 to £12,200, but theft from a vehicle increased by 17 per cent to £3,000.
The ABI said car insurers paid out £1.13 in claims in 2023 for every £1 collected in premiums, according to consultants at EY.
But critics say premium hikes defy the fact that the single biggest cost car insurance premiums pay for – bodily injury claims – are dropping.
The £1.13 figure above does not include the money insurers made from investments, which can be substantial.
ABI director of general insurance policy Mervyn Skeet said: ‘While our latest figures show the second consecutive quarterly drop in average motor insurance premiums, we know that the industry continues to face significant cost pressures, and the price of cover remains a strain on household finances.
‘We remain determined to do all we can to support motorists.’
Last month the Government demanded answers about the rising cost of car insurance.
A Labour review is quizzing insurers on those hardest hit by rising costs, including ethnic minorities, those on lower incomes and elderly and young drivers.
A taskforce looking at the issue includes industry groups and consumer champions such as the Association of British Insurers (ABI), Citizens Advice, Which? and Compare the Market, as well as insurance regulators.
