Ministers will launch a probe into sky-high car insurance costs causing misery for drivers.
Transport Secretary Louise Haigh has ordered a new taskforce to look at spiralling premiums and the impact on those hit hardest, such as low-income families, young drivers and the elderly.
Car insurance premiums have soared an average of 21% since June 2022, according to analysis by the Financial Conduct Authority (FCA) watchdog, outpacing growth in countries like France and Germany. Factors driving up the cost of insurance include inflation, rising car thefts, and pothole-ridden roads.
Ms Haigh has tasked the FCA and the Competition and Markets Authority (CMA) to assess whether consumers are getting value for money after concern that some groups are getting a raw deal. She is understood to be concerned about the postcode lottery some consumers face, with different prices quoted for drivers living only a few streets apart.
Poorer families, and younger, elderly or ethnic minority drivers appear to be adversely affected. Alongside Economic Secretary Tulip Siddiq, she will also bring together industry and consumer groups such as the Association of British Insurers, Citizens Advice, Which? and Compare the Market today(WEDS) to look for solutions to driving down costs.
Ms Haigh said: “Car insurance is an essential, not a luxury. It is vital to accessing economic opportunities, and this Government is committed to getting costs under control. That’s why we’re taking direct action to bring insurance companies and regulators round the table to discuss how we can crack down on spiraling costs.
“The rising cost of cover affects all drivers, but some groups have been hit harder than others. No matter your background or circumstance, this Government is determined to ensure drivers get a fair deal.”
Hannah Gurga, Association of British Insurers (ABI) director general, said: “We’re aware just how tough the last couple of years have been for motorists and we have been working hard with our members to tackle the cost of claims that impact on premiums.
“While average premiums have fallen recently, there should be no loss of momentum on tackling costs and we look forward to bringing ideas to the taskforce table, building on the 10-point roadmap we released earlier this year.”
Insurers argue they are passing on the rise in the cost of claims to consumers, which is driven by soaring prices for parts and labour.