(qlmbusinessnews.com Fri, 11th Aug, 2023) London, UK —
Drivers in the UK are facing record-high car insurance premiums, with rising inflation and soaring vehicle repair expenses being attributed as the main culprits.
An extensive study of 28 million insurance policies revealed that the average premium for the three months leading up to the end of June reached £511, marking a 21% increase from the same period last year.
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Some drivers have reported receiving quotes that are three times higher than the previous year's rates.
The Association of British Insurers (ABI) has pointed to sustained cost pressures as the driving force behind these unprecedented highs.
During the first quarter of this year, the industry paid out a total of £2.4 billion in motor insurance claims, covering theft, vehicle repairs, and personal injuries, signifying a 14% surge from the same timeframe in the previous year, according to the ABI.
The cost of vehicle repairs witnessed a substantial 33% leap over the year, reaching £1.5 billion, which is a reflection of rising costs, including inflation in energy prices.
The ABI stated that one insurer reported a 40% surge in labor rates between June 2022 and January this year, coupled with a cost increase of up to 21% for many replacement parts.
For drivers renewing their insurance, average policies climbed by £36 compared to the previous quarter, reaching £471. Meanwhile, the average premium for a new policy rose by £21 to £566.
The ABI explained that this difference reflects the “distinct risk profile of new and renewing customers,” noting that new customers might be more likely to be younger and less experienced drivers.
Diane Cedra, a 66-year-old resident of Solihull in the West Midlands, shared that her insurance premium for her Peugeot 2008 with Saga surged from £211.99 last year to nearly triple that amount, £620, when it expired on July 31. After some adjustments and a customer loyalty bonus, she ended up paying £411. The reasons Saga gave for the increase were inflation and a “massive” number of claims that needed to be paid out.
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Karl Kemp from Burnley faced a similar situation. Churchill quoted him £1,653.66 to insure his Range Rover Evoque, up from £925.90 the previous year, despite no changes in his circumstances. He found a more reasonable quote after shopping around.
Consumer group Which? expressed concern that these premium highs are occurring “at the worst possible time for consumers already battling cost pressures in a number of other areas.”
The ABI's analysis focused on the average prices for premiums paid, rather than the quoted prices.
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