Record-breaking surge in claims drives up car insurance premiums

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【Summary】Car insurance premiums have reached record highs as insurers face increased claims and costs associated with insuring electric vehicles. UK motorists paid an average of £924 in Q3 2023, the highest since tracking began in 2006. Premiums have risen for eight consecutive quarters, with the average price for comprehensive car insurance increasing by 58% in the past year. Insurers are grappling with the challenges of rising claims and pricing for more expensive vehicles like electric cars.

FutureCar Staff Oct 13, 2023 6:29 AM PT

Record-breaking surge in claims drives up car insurance premiums

Car insurance premiums have reached record highs due to a surge in claims costs, according to new data. Insurers are facing increased expenses related to insuring electric vehicles, contributing to the rise in premiums. In the third quarter of 2023, UK motorists paid an average of £924 for car insurance, the highest level since data tracking began in 2006. The price of comprehensive car insurance has been steadily increasing, rising by £338 or 58% in the past year.

The upward trend in car insurance costs is not a new phenomenon. The WTW/Confused.com Car Insurance Price Index, which analyzes data from over 6 million quotes per quarter, reveals that premiums have been rising for eight consecutive quarters. Steve Dukes, the CEO of Confused.com, noted that the latest quarter saw the highest prices recorded across all regions of the UK. Insurers are facing challenges such as increased claims and the need to account for more expensive cars on the road, including electric vehicles.

The transition to battery electric vehicles (BEVs) is presenting additional challenges for the motor insurance sector. A report by Thatcham Research earlier this year warned that the sector will need to adapt to accommodate the new technology, which will result in higher costs. Despite the current situation, Dukes expressed optimism that price growth will eventually stabilize as adjustments are made. However, he emphasized the importance of insurers taking action to ensure that prices remain affordable.

While car insurance premiums continue to rise, major motor insurance groups like Admiral are seeing increased profits. This places the burden of inflation and policy costs on consumers.