Average motor insurance premium £157 higher at end of 2023 than a year earlier

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The typical worth paid for motor insurance coverage within the remaining quarter of 2023 was round a 3rd, or £157 in money phrases, greater in contrast with a yr earlier, in response to the Affiliation of British Insurers (ABI).

Between October 1 and December 31 2023, the typical worth paid for personal motor cowl was £627, up from £470 throughout the identical interval a yr earlier.

The ABI pointed to surging prices for insurers, similar to longer restore occasions, greater restore prices, and the rising worth of substitute automobiles.

Rising restore prices are as a consequence of a combination of the value of labour, vitality prices, and automobiles changing into extra refined, with electrical automobiles requiring extra specialist experience to restore, the ABI mentioned.

Its motor insurance coverage premium tracker analyses practically 28 million insurance policies offered in a yr and relies on the value prospects pay for his or her cowl somewhat than what they’re quoted.

Mervyn Skeet, the ABI’s director of basic insurance coverage coverage, mentioned: “We’re aware of the influence that rising motor insurance coverage premiums proceed to have on motorists.

“Rising restore prices and different components outdoors of insurers’ management imply there isn’t any single motion that would deliver down premiums. Nonetheless, we’re decided to do all we will to place the brake on.

“We’re working with our members to grasp what actions may be taken to assist motorists handle prices. The price of paying month-to-month (premium finance) is one among various subjects we proceed to debate with our members and the Monetary Conduct Authority (FCA).

“We’ve additionally been very clear, and proceed to underline, that slicing insurance coverage premium tax would supply fast reduction for stretched shoppers.”

The ABI estimates that insurance coverage premium tax presently provides round £67 to the typical motor premium. The tax is levied on insurers however the associated fee is handed on to prospects by means of the costs they pay.

Current analysis by shopper group Which? indicated that in September 2023 these paying month-to-month for an annual coverage confronted paying round £309 extra on common over the yr than these paying in a single go.

Youthful motorists, who typically pay the very best premiums, could also be extra more likely to pay month-to-month, Which? mentioned.

Specialist brokers might be able to assist people who find themselves discovering it exhausting to get insurance coverage. The British Insurance coverage Brokers’ Affiliation can assist put folks in contact with a specialist dealer.

A Monetary Conduct Authority spokesman mentioned beforehand that the physique has already advised insurers they need to guarantee their merchandise present honest worth and it expects companies to proceed to help prospects in monetary problem and mirror on whether or not they can do extra to help folks with decrease monetary resilience.