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ABI Update: Motor insurers pay out record amounts to help keep motorists mobile

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 recently 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.

 

ABI Update: Motor insurers pay out record amounts to help keep motorists mobile f
Image credit: Shutterstock

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.

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:

ABI Update: Motor insurers pay out record amounts to help keep motorists mobile j fong
Jonathan Fong

“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.”

If NOT adjusted for inflation the average claim in 2014 was £2,683. The average premium when NOT adjusted for inflation in 2014 was £387.

The Association of British Insurers is the voice of the UK’s world leading insurance and long-term savings industry. A productive, inclusive, and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.

More news and information from the ABI is available on www.abi.org.uk.

Source www.abi.org.uk

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Owain Griffiths

Owain Griffiths

Head of Circular Economy at Volvo Cars

Owain joined Volvo Cars in June 2021 to lead Circular Economy in the Global Sustainability Team. The company has committed to being a circular business by 2040 and has financial, recycled content and CO2 based targets for 2025, all of which Owain is working across the company to make happen. Owain previously worked for circular economy consultancy Oakdene Hollins where he advised businesses on evidence led circular economy implementation. 

Turning into a circular business and the importance of vehicle reuse and recycling.

The presentation will cover the work Volvo Cars is doing to achieve 2025 but mainly focus on the transformational work towards 2040 and the business and value chain changes being considered. Attention will be paid to the way vehicles are being dealt with at the end of life and the complexities of closing material and component loops. Opportunities and challenges which Volvo Cars is facing will be presented including engagement with 3rd parties and increasing pressure from stakeholders.

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