Car insurers pay out record amount to motorists
Car insurers paid out a record £9.9 billion to motorists in 2023, as claims hit the highest amount since records began back in 2013.
It was a huge 18.4% up on 2022 and went towards settling theft, repairs, replacement vehicles and personal injury.
The Association of British Insurers (ABI) says it works out at £1.13 million paid out every hour to settle motor claims.
The overall number of claims settled, 2.3 million, was also up 10% on 2022.
At £6.1 billion, vehicle repairs was the biggest factor in the record cost of settling claims. The figure jumped 31% from the £4.7 billion paid in 2022, reflecting rising costs for materials, labour and energy.
Payouts for vehicle theft rose 23% to £669 million, with the average theft of a vehicle claim of £12,600 reaching the highest on record.
The cost of providing loan cars also rocketed 35% to £597 million. However, the £2.4 billion paid out in personal injury claims was actually down 8% last year.
The inevitable result of all this is higher car insurance prices. Last year, the average price paid for motor insurance reached £543 - an eye-watering 25% up on 2022.
"Significant and sustained cost pressures faced by insurers, such as the 31% rise in repair costs over the last year, have impacted on the cost of cover," says the ABI’s Jonathan Fong.
To try and help motorists with rising costs, the ABI has now published a roadmap aimed at tacking high motor insurance prices.
It includes making more data available to customers to understand which vehicles are more expensive to insure, adopting a Graduated Drivers Licencing scheme to improve road safety and cutting the insurance premium tax.
The ABI added that, adjusted for inflation, the average total cost of a settled car claim has risen 23% in nine years, from £3500 in 2014 to £4300 in 2023.
The average car insurance premium has risen 8%, it claimed – from £505 to today’s £543.