Unlock the Editor’s Digest without cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
UK motorists are being quoted a brand new file sum of just about £1,000 for the typical annual insurance coverage coverage, after a dramatic acceleration in costs that has prompted issues over further pressures on family budgets.
Motorists had been quoted a mean of £995 for annual insurance policies within the ultimate quarter of 2023, a rise of 58 per cent on the yr earlier than, comparability web site Confused.com and insurance coverage dealer Willis Towers Watson mentioned on Tuesday.
Confused.com, on whose platform the index of quotes is predicated, mentioned it was a “bleak time for drivers and their automobile insurance coverage”.
Folks simply eligible to drive, at 17 years of age, acquired quotes of £2,877 on the typical coverage, in accordance with the information. That represented a 98 per cent year-on-year enhance in value for these motorists, which insurers view as increased threat.
Insurers lifted their premiums sharply final yr in response to a surge in the price of their claims, pushed by huge will increase within the value of automobile components, second-hand automobiles and labour.
That value inflation pushed the sector to its worst underwriting loss in a decade in 2022, triggering revenue warnings and share value falls. However situations within the sector have stabilised over the previous yr as insurers began to push by means of huge value rises to counteract the claims prices.
Costs are set to extend this yr, in accordance with trade forecasts, at the same time as politicians and shopper teams voice concern in regards to the impression of rising prices on the thousands and thousands of households reliant on a automobile for work and household life.
“It’s essential that insurers do not forget that the obligatory nature of the duvet implies that pricing [here] will all the time be topic to a lot larger scrutiny than different traces of enterprise,” mentioned Duncan Minty, an impartial guide on ethics in insurance coverage.
Residents Recommendation has beforehand urged the federal government and insurers to contemplate “daring concepts” that may take stress off cash-strapped households for a monetary product it deems an “on a regular basis necessity”.
Tuesday’s index confirmed an 8 per cent enhance in the price of the typical coverage between the third and fourth quarters of 2023, that means the speed of development decelerated in contrast with earlier within the yr.
Drivers in internal London, the most costly a part of the UK to insure, paid £1,607 on common.
Louise Thomas, motoring skilled at Confused.com, mentioned that whereas information instructed “will increase could possibly be slowing for now”, drivers ought to think about including antitheft options, reminiscent of wheel locks, to their automobile, or reviewing what number of miles they drive, to carry prices down.
The index displays costs which might be quoted to prospects, who may go on to seek out cheaper cowl elsewhere.
Against this, the typical annual coverage value £561 within the third quarter of 2023, a yearly rise of 29 per cent, in accordance with the newest version of the Affiliation of British Insurers’ personal index, which is predicated on premiums paid by prospects.
The Confused.com information set runs again to 2006, however its methodology was amended a number of years in the past, with historic figures restated to be comparable.