The mainstream media has been awash with tales of car insurance premiums doubling, trebling or even bigger rises. People on Twitter, Facebook and other platforms are complaining about premiums, TV expert Martin Lewis and Geoff Buys Cars on You Tube are all over it. Let’s face it, as an industry this is likely to be one of the biggest PR headaches of 2024, especially for insurers covering Range Rovers, prestige cars being targeted by thieves and electric/battery SUVs too.
The fire risks and extra costs associated with processing EV claims have been well documented by IE, and experts in the repair sector have explained how the sensor checks, calibration sign off, battery removal, storage and refitting – plus parts supply issues – have all conspired to create a perfect storm in 2022-23. The big question is where do we go from here on repairs, salvage and risk profiling?
IE has championed reform of the antiquated 1990s Fully Comp vs TPF&T model used by car insurers in the UK. Maybe now is the time to implement a new personal data, real time data, PAYG monthly insurance policy offer? As automated data systems evolve and cars are packed with tech that records journey patterns and driver behaviour, the opportunity is there to separate the midnight chicken shop risk-takers from the mid-morning Aldi shoppers.
It’s also important that the industry reminds the government – all governments – that tolerating blatant law-breaking leads to higher insurance premiums, for car, home and commercial property owners and HNW individuals too. In many ways, insurance is part of the glue that holds society together – an unwritten wider social contract – and we dispose of its power at our peril. Uninsured, unlicensed drivers must face harsher consequences than simply having a vehicle seized and a measly £400 fine – it’s obviously no deterrent.
Here’s some data on pricing trends from Consumer Intelligence, which shows how regional trends in car premiums are shifting;
The average quoted price of car insurance rose by 67.2% in the year to November – the highest annual increase on record, the latest Consumer Intelligence Car Insurance Price Index shows. This beats the 61% rise in the year to August 2023 and the 34% increase in the year to May 2023 which were the two previous record increases. However, there are signs of a slowdown – while quoted premiums rose 10.6% in the three months to November, that was significantly lower than the 22% rise in the three months to August and the 15.2% increase in the three months to May.
Data shows that in November, drivers most commonly received a quote between £500 and £749 with 21% of quotes falling in this price range. Record payouts for claims of £2.54 billion in the third quarter of 2023 as reported by the Association of British Insurers as well as damaged caused by Storm Babet, particularly in Scotland and the East Midlands, has added to the quoted premium increases.
However, telematics providers have become more competitive accounting for 18% of the top five quotes compared with 17% in the year to August but down from 24% in the three months to February.
“Record payouts for claims are having an impact on quoted premiums and there is evidence that in certain areas such as Scotland and the East Midlands recent storms have had an impact on premiums,” says Max Thompson, Insurance Insight Manager at Consumer Intelligence. During the last quarter small increases in telematics competitiveness were observed across all the age groups of one to two per cent. However, motorists across all age groups and all over the country are seeing major increases in quoted premiums,” adds Thompson.
Long-term view
Average overall quoted premiums have more than doubled by 124.4% since October 2013 when Consumer Intelligence first started collecting data. Quoted premiums are at their highest levels since Consumer Intelligence records began with 64.2% of the increase happening in the year to end-November.
Age differences in the past year
Younger drivers have experienced the biggest rises in quoted premiums of 73.1% compared with 57.2% for the over-50s and 63.9% for motorists aged between 25 and 49.
Telematics
Telematics policies provided 43% of the rank one to five quotes for under-25s compared with 14% for those aged between 25 and 49 and 7% for the over-50s in the three months to November. The proportion of rank one to five quotes for under-25s has however been as high as 56% this year.
Regional differences
Average quoted premiums have risen the most for drivers in London and the South East with Increases of 76.9% and 71.3% respectively.
However, all regions are experiencing major increases in quoted premiums with the South West the only region recording a rise of less than 60% and its increase was still 57.2%.
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