Average cost of motor premiums at record high

Posted on: 24 January 2018

A new release from the Association of British Insurers (ABI) confirmed that the average price of motor premiums rose by 9% in 2017, adding an extra £40 to the average insurance policy. Urgent reform to compensation pay-outs are needed to help put the brakes on rising premiums.

The ABI’s Premium Tracker, out today, is the only market survey measuring prices consumers actually pay for their motor cover, rather than quotes. It showed that in the fourth quarter of 2017:

  • The average price paid for private comprehensive motor insurance was £493.
  • This was the highest quarterly figure since ABI started collecting the data in 2012, up 6% on the same quarter 2016.
  • The average premium paid over the whole of 2017 at £481 was 9% higher than the previous year, and the highest since ABI started collecting this data back in 2012. This added an extra £40 to the average premium.
  • The average cost of motor cover has leapt by 29% since 2014.

The ABI is urging the Government to help reduce the cost of motor insurance by:

  • Introducing, as quickly as possible, its reforms to how compensation for large personal injury compensation awards is adjusted (known as the Discount Rate) to ensure a fairer system for claimants and insurance customers.
  • Push ahead with reforms of how lower value whiplash-style claims are handled.
  • Freezing the rate of Insurance Premium Tax, currently 12%.

Simon McGinn, general manager, Commercial & Personal at Allianz insurance had this to say:

“With no sign of any movement on the discount rate in 2018, and quite possibly even 2019, this is a very concerning time for customers. We will be having discussions with the broking community about how best to effectively manage the rising costs of personal injury claims. Customers who read about rising insurance costs need to be made aware that the industry is robustly putting across the case for the government to take action.”

The full press release has more detail on the findings.