Responding to the news that a record £11.7bn was paid in motor
claims in 2024, Rocio Concha, Which? Director of Policy and
Advocacy, said:
"High premiums have been an issue for many motorists for a number
of years now, and with a cost of living crisis still impacting
consumers' spending power, many of those who can only afford to
pay for cover monthly are being unfairly penalised.
"WIth some firms charging eye-watering rates of interest to pay
for cover monthly, the overall cost of an annual premium can
increase by hundreds of pounds - despite the risk being
relatively low to insurers and these customers often being less
financially resilient.
"The FCA needs to get tough with firms charging excessively high
rates of interest on monthly repayments. It should gather
information from firms on profit margins and commission levels -
and take
tough action against firms continuing to behave in this way."
PA COPY:
PA: Record £11.7bn paid in motor claims in 2024 says
Association of British Insurers
By Vicky Shaw, PA Personal Finance Correspondent
Motor insurers paid out a record £11.7 billion in car insurance
claims in 2024, with the average cost of cover paid by drivers
rising by £78 annually, according to data from the Association of
British Insurers (ABI).
The body said rising theft and repair costs are continuing to
have an impact on premiums.
The average cost of motor cover across 2024 was £622 – 15%, or
£78, higher than 2023.
But there have been signs of insurance costs for drivers edging
down in recent months.
The average price paid by motorists for cover in the final
quarter of last year was 2%, or £14, lower than at the start of
the year.
The typical cost paid for cover in the final quarter of last year
was £621, down from £635 in the first quarter of 2024.
Total claims payouts for privately-owned cars were 17% higher in
2024 compared with 2023, according to the ABI, and the highest
since it started collecting the data in 2020.
During 2024, insurers dealt with 2.4 million motor insurance
claims, paying around £4,900 per claim on average across the year
and a record average high of £5,300 in the final quarter of last
year.
Vehicle repair costs totalled £1.9 billion in the fourth quarter
of 2024, taking the yearly total to £7.7 billion – another record
high and £1.5 billion more than the total for the year 2023, the
ABI said.
The ABI has previously set out a “road map” with suggested steps
that the industry and government can take to tackle insurance
costs. It said it will continue to collaborate with members,
partner organisations, regulators and the Government to build on
progress.
The ABI said tackling skills and capacity challenges in the
vehicle repair sector and improving the UK's roads would also be
steps that could help combat high costs.
Mark Shepherd, head of general insurance policy at the ABI, said:
“Our latest data paints a difficult picture for drivers and the
industry alike. Through our 10-point road map, we've been working
hard to help tackle the cost of motor insurance and we've seen
progress in some areas, with average premiums having fallen from
their peak.
“However, we recognise that the price of cover remains a strain
on household finances whilst the industry faces significant cost
pressures.”
He said it is “vital” that insurance premium tax (a tax paid by
insurers which feeds into prices paid by consumers) is not
increased, adding: “We look forward to continuing to work with
the Government and wider sector to help support drivers and
tackle claims costs.”
