average price paid for motor insurance in the second quarter of 2023 continued its upward trend as insurers battle sustained cost pressures, such as a 33% rise in vehicle repair costs, according to the ABI’s latest Motor Insurance Premium Tracker.
In June, analysis from international consultants EY said that “the UK motor insurance market experienced its worst performing year in a decade in 2022’. Their report highlighted that for every £1 motor insurers received in premiums, they paid out £1.10 in claims and operating costs.
Their latest tracker shows that in the second quarter of this year that the average premium paid for private comprehensive motor insurance was £511, up 7% on the previous quarter.
The current average premium is 21% higher compared to Q2 2022 and is at its highest since we started collecting this data back in 2012.
The average price paid by motorists renewing their cover rose by £36 on the previous quarter to £471, while the average premium for a new policy was up £21 to £566.The distinction reflects the different risk profile of new and renewing customers.
For example, a new customer may be more likely to be a younger, less experienced driver.
The FCA rules on the pricing of motor and home insurance introduced on 1 January 2022 ensure that the price paid by renewing customers for motor and home insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as insurer, broker, or price comparison website.
However, the rules do not set or cap the level of premium paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims.
