“The 2pc increase in motor insurance premiums is worrying. There has been great progress in reducing the cost of claims and motor insurance premiums in recent years but sadly this has been heading the wrong direction of late, with today’s report showing that claims costs have returned to pre-Covid levels. The uptick in motor insurance premiums recorded in today’s report is evidence that ultimately it is consumers that pay for high claims costs. It must be noted too that the increase in motor insurance premiums captured in today’s report is for the year 2023 – motor insurance premiums have been steadily rising throughout 2024 too, with the latest figures from the CSO showing motor insurance premiums have risen at 15 times the rate of inflation*.
Today’s report is evidence of the far-reaching consequences of high inflation. The report shows that damage claim costs have overtaken injury claims costs and now account for 53pc of total settled claims costs – up from 47pc in 2022. High inflation is likely at the heart of much of the increase in the cost of damage claims. It is well documented that soaring inflation has led to shortages of labour and car parts worldwide and that this in turn has driven up the cost of car repairs. It could very well be the case that the cost of damage claims will continue to go up – recent figures from the CSO show that the cost of car maintenance and repairs has risen at ten time the rate of inflation. If the cost of damage claims continues to go up, so too will the rate that motor insurance premiums will increase by.
It is worrying that despite recent reforms, litigated channels account for almost four in ten of injury claims settled in 2023. More needs to be done to encourage people to use the Personal Injuries Assessment Board (PIAB) because this will ultimately reduce claims costs – and in turn insurance costs for consumers. Motor insurance premiums would likely fall further if we could strip out the legal bills associated with claims pursued through the courts.
One of the recommendations made by the Government’s Cost of Insurance Working Group back in 2017 in order to tackle the cost of motor insurance was to reduce the number of uninsured drivers. Unfortunately, this too is a trend that is heading the wrong direction, with the number of claims related to accidents caused by drivers who were either uninsured or untraced rising 11pc last year. A survey conducted by Peopl last year found that one in five people know someone who has got behind the wheel uninsured – with affordability issues believed to be the main reason so many of these people get behind the wheel without cover. It is well known that the cost of car insurance is often prohibitive for young people. If affordability issues are at play here, the Government should do more to look at what measures could be taken to bring down the cost of insurance for starter drivers. More needs to be done to discourage uninsured driving in this country as the message has clearly not got to everyone. It is unfair on the drivers who rightly pay for their insurance that so many other are flouting the rules and driving uninsured as ultimately this costs honest drivers money.”
*As per Consumer Price Index September 2024, which recorded a 10.4% increase in motor insurance premiums between September 2023 and September 2024. This compared to a 0.7pc increase in the rate of general inflation.
