General Insurance Article - Car insurers pay out record amounts to keep motorists mobile

Average of £1.13 million paid out every hour in motor claims last year. Over last decade, claims costs have risen at almost 3x rate of premium increases (adjusted for inflation). In the face of sustained cost pressures, the industry is working on measures to help motorists manage their motor insurance bills.

 Motor insurers paid a record amount in motor claims last year – an average of £1.13 million every hour – according to latest Motor Insurance Claims Tracker published today from the Association of British Insurers (ABI). The £9.9bn paid out in 2023 is the highest annual figure since the ABI started collecting the claims data back in 2013.

 Our data shows that in 2023:

 In total insurers paid out £9.9 bn in motor insurance claims – theft, repairs, replacement vehicles and personal injury. This was the highest annual figure since we started collecting this data back in 2013. This equated to £1.13 million paid every hour. This was up 18% on the £8.4 billion paid in 2022. The overall number of claims settled, at 2.3 million, also rose 10% on 2022.

 The cost of vehicle repairs at £6.1bn, jumped by 31% from the £4.7bn paid in 2022. This reflected continued rising costs, with some insurers reporting further increases of 16% for materials, and 15% for labour. Some garages faced a 300% rise in their energy costs during 2023.

 Payouts for vehicle theft (of and from a vehicle), and the average theft claim were both at record levels. The £669 million paid out rose by 23% on the £543 million paid in 2022. This, and the average theft of a vehicle claim of £12,600, were both the highest on record.

 The cost of providing temporary replacement vehicles, at £597 million, leapt 35% on the £444 million paid in 2022. This represented another annual record since this data has been collected.

 As part of the overall payout figure, insurers paid out £2.4 billion in personal injury claims, down 8% on the previous year’s figure of £2.6 billion.

 When adjusted for inflation, since 2014 the average cost of a car insurance claim has outpaced average premium increases.

 Adjusting for inflation, the average total cost of a settled car claim has increased by 23% from £3,500 in 2014 to £4,300 in 2023. Over the same period, and also adjusted for inflation, the average premium rose by 8%, from £505 to £543.1

 Industry taking steps to help motorists manage the cost of motor insurance

 Higher costs have impacted on the price of cover, with the average price paid for motor insurance in 2023, at £543, 25% more expensive than in 2022.

 To help support motorists, the ABI recently published a roadmap aimed at tackling motor insurance costs. This outlines 10 steps with a combination of actions that industry, government or regulators could initiate or improve on. These include making more data available for consumers to understand which vehicles are more expensive to insure, adopting Graduated Drivers Licensing to improve road safety, and the cutting of insurance premium tax.

 In addition to this, the ABI is also commissioning research into the feasibility and impact of various social policies focused specifically on helping low-income households manage their insurance costs.

 Jonathan Fong, the ABI’s Manager, General Insurance Policy, said: “Significant and sustained cost pressures faced by insurers, such as a 31% rise in repair costs over the last year, have impacted on the cost of cover. Despite this, insurers continue to do all they can to ensure competitively priced motor insurance. Through our recently published Roadmap, the industry is working hard to combat rising motor insurance costs. And it can still pay to shop around to get the policy that best meets your needs at the most competitive price.”   

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