ILC ARTICLE

New premiums rising faster than renewals

9th August 2022

The Association of British Insurers has reported a £5 increase in the average price of motor insurance in the second quarter of the year.

Its latest Motor Insurance Premium Tracker saw premiums increase to an average of £419, however, this is still £11 lower than the same quarter in 2021.

The ABI says that while it’s too early to assess the full impact of the Financial Conduct Authority’s changes to pricing rules around renewals and new policies, there are early trends to be aware of. For example, the average premium paid for a new policy in the second quarter was up three per cent to £500, while renewed policies increased just 0.5% to £371.

Increases have been attributed to more expensive repairs, rises in the costs of raw materials, and a shortage of skilled labour.

Callum Tanner, the ABI’s Manager, General Insurance, said: “Insurers appreciate that these are difficult times for many households dealing with the rising cost of living. While, like many other sectors, motor insurers are facing higher cost pressures of their own, which are becoming increasingly challenging to absorb, they will continue to do all they can to keep motor insurance as competitively priced as possible.”