Car insurance premiums fall for the first time in two years

Richard Aucock, Contributor
Fri, 23 Aug 2024

Official figures show average car insurance premiums fell 2% last quarter - the first drop since 2022. However, the average car insurance premium is still £622.

The data is from the latest Association of British Insurers (ABI) Motor Insurance Premium Tracker. This analyses 28 million policies sold in the UK.

While admitting car insurance is expensive, the ABI insists things are just as challenging for car insurers too, with repair costs rising 28% over the past year. The latest figure of £2.9 billion paid out in motor insurance claims is 18% higher than in 2023.

The trade body says the information is the only one based on the prices customers pay, rather than what they are quoted – the latter often being a higher figure.

However, the good news is limited by a 1% quarterly increase in premiums between January and April 2024. What’s more, the figure for Q2 2024 is still a staggering 21% higher than just 12 months ago.

Accounting firm EY estimates that for every £1 collected in car insurance premiums, the industry paid out £1.13 in claims and expenses.

At least the pressure on claims costs is now easing, with the average claim paid remaining stable last quarter, after an 8% rise in Q1.

"We’re encouraged to see an easing of increases to motor insurance premiums as recent claims costs stabilise," confirms ABI director Mervyn Skeet.

"While this is good news, we need to continue our work focusing on claims costs, for the good of consumers. This is a top priority for us and our member insurers."

The ABI earlier this year launched a ’10-Point Roadmap’ to deliver cheaper car insurance. Suggestions included more information for consumers, better road safety and cutting Insurance Premium Tax.

Ask HJ

Do I need to tell my insurance that I was in an accident in a friend's car?

My car was stolen, but I paid for the whole year of insurance. I was insured on my friends car for 2 weeks while she was on holidays. I was involved in an accident that wasnt my fault. My friends insurance sorted it out. Do i need to tell my insurance about it?

Even if the accident wasn’t your fault, your insurer will still need to know about it. That’s because claims are marked against the driver themselves, rather than the vehicle which was involved at the time. You should tell insurers of any incidents from the past 5 years, although this may differ depending on the insurer. Failing to do so could invalidate your insurance, so always be honest.

Answered by Louise Thomas

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