Car insurance prices fall for first time in two years as cost of living eases further | Personal Finance | Finance
The average price paid for car insurance fell by £13 when comparing April to June with January to March, marking the first quarterly decrease in two years, according to the Association of British Insurers (ABI).
Typical motor insurance premiums fell by two percent in the second quarter of this year compared to the first quarter of 2024, bringing the average price down to £622.
This reduction follows a one percent increase in premiums in the first quarter of this year when the average premium was £635.
Despite the quarterly decrease, the annual average premiums were still 21 percent or approximately £111 higher in the second quarter of this year. In the same period of 2023, the average premium was £511.
Claims costs seem to have stabilised, according to the ABI.
However, insurers still paid out £2.9billion in motor insurance claims in the second quarter of this year, an 18 percent increase on the £2.5billion paid out in the same period of 2023.
Repair costs have also risen, and the average cost of theft from a vehicle has reached a record high of £3,100, the ABI reported.
The ABI described 2023 as a “difficult year” for motor insurance margins, with consultants EY estimating that for every £1 collected in premiums, the industry paid out £1.13 in claims and expenses.
This follows a similar trend in 2022 when the industry paid out £1.11 in claims and expenses for every £1 collected in premiums.
Mervyn Skeet, the ABI’s director of general insurance policy, remarked: “After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as claims costs stabilise.”
“While this is good news, we need to continue our work focusing on claims costs, for the good of consumers. It remains a top priority for us and our member insurers.”
The ABI’s tracker surveys nearly 28 million policies annually and relies on data from policies sold, not just quoted figures.
Rocio Concha, Which? director of policy and advocacy, commented: “It’s encouraging to see premiums starting to fall, and motorists will certainly hope this trend continues.
“However, with premiums rising significantly over the past year, many drivers opening their renewal quotes will still get a nasty shock.”
“To make matters worse, drivers who can’t afford to stump up for annual cover all in one go, and instead pay monthly, can end up paying hundreds of pounds more over the course of a year due to the high levels of interest charged on payments.”
