Source: Association of British Insurers
Motor insurers paid out £2.5 billion in motor claims in the second quarter of this year, up 29% on the £2 billion paid in the same quarter last year according to latest ABI data published today. This was the highest quarterly figure since we started collecting data back in 2013. This rise exceeds the 21% rise in average motor insurance premium paid during the same period (ABI Motor Insurance Premium Tracker)
Our data shows that between 1 April and 30 June this year:
- In total insurers paid out £2.5 billon in all motor insurance claims – theft, vehicle repairs, replacement vehicles, personal injury. This was up 3% on the previous quarter, and a rise of 29% on the £2 billion paid in Q2 2022. The overall number of claims settled, at 592,000, was up 18% on Q2 2022.
- The costs of vehicle repairs leapt by 46% over Q2 2022 to £1.5 billion, the highest figure since ABI started collecting this data back in 2013. This reflects rising costs for insurers, including energy inflation, labour rates and more expensive repairs.
- The costs of providing replacement cars while vehicles are being repaired, jumped 52% from £103 million to £157 million. This reflects longer average repair times, meaning that these vehicles are often supplied for longer.
- Payouts for vehicle theft, at £196 million increased by 53% on the £128 million paid in the same period last year. This in part reflects increases in the average price of second-hand cars, which rose by 28% between April 2021 and June 2023 (source: Auto Trader).
As part of the overall payout figure, insurers paid out £602 million in personal injury claims in the second quarter of this year, down 6% on the previous quarter’s figure of £642million, and down 8% on the £651million paid in Q2 2022. Indications are that the whiplash reforms introduced in 2021 to create a simplified, fairer, more efficient, and cost-effective compensation system are having an impact.
Payouts outstrip rises in the average premium
Claim payouts over the year have risen at a faster rate than increases in the average motor insurance premium paid. Our latest Motor Insurance Premium Tracker – which tracks average prices paid, rather than quotes – shows that the average premium is currently £511, up 21% compared Q2 2022.
Separately, 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.
Laura Hughes, ABI’s Manager, General Insurance, said:
“Motor insurers continue to deliver when motorists and personal injury claimants need them the most. Despite facing sustained cost pressures, motor insurers remain totally focussed on supporting customers when the worst happens, and doing all they can to ensure competitively priced motor insurance.
“With many families facing higher cost of living bills, anyone concerned about being able to afford their insurance should speak to their motor insurer to see what options might be available. And despite cost pressures, it can still pay to shop around to get the policy that best meets your needs at the most competitive price.”
Our recently produced consumer information here abi.org.uk/insuranceFAQs sets out the range of factors involved in the pricing of motor insurance.