Press Team
Helen Mitchell
Assistant Director, Head of Communications and Marketing
Heidi Pullig
Communications Manager
Shaelyn Stout
Communications Adviser
Jemima Wright
Communications Adviser
Despite the quarterly drop, the average cost of motor insurance in the third quarter of this year was £50 (9%) higher than the same period in 2023. This year-on-year increase is due to the significant and sustained cost pressures insurers are experiencing, as a result of record claims costs and broader price inflation.
Our latest claims data shows:
When adjusting for inflation, the average premium paid is now £23 lower than peak prices in Q4 2017. Inflation adjusted data shows what historic costs would have been if they faced the same inflationary pressures we're experiencing today, uncovering the real growth or decline. Therefore, over the long term and in real terms, the average premium is 4% cheaper compared to peak prices, while the average cost of a settled claim is 21% more expensive.
2023 was a difficult year for motor insurance margins, with EY estimating that for every £1 collected in premiums, the industry paid out £1.13 in claims and expenses.2 This follows a similar result in 2022 when the industry paid out £1.11 in claims and expenses for every £1 collected in premiums.
Action on motor premiums Building on the ABI’s existing work to combat the cost of motor cover, which includes its 10-Point Roadmap and Premium Finance Principles,3 the trade body is working alongside consumer groups as part of a stakeholder panel, advising the government’s newly established motor insurance taskforce.
“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. As part of this, we’re committed to playing our part in supporting the government’s taskforce, and we look forward to bringing our ideas and expertise to the table, contributing to this initiative on behalf of our members.”
ABI Director of General Insurance Policy