ABI data shows that between 1 January and 31 March 2023:
In total insurers paid out £2.4 billon in all motor insurance claims –theft, vehicle repairs, replacement vehicles, personal injury. This was up 11% on the previous quarter, and a rise of 14% on Q1 2022. The overall number of claims settled, at 599,000, was also up 14% on the same quarter 2022.
The costs of vehicle repairs leapt by 33% over the year since Q1 2022 to £1.5 billion, the highest figure since ABI started collecting this data back in 2013. This reflects rising costs, including energy inflation, and more expensive repairs.
The costs of providing replacement cars while vehicles are being repaired jumped 29% in the last year since Q1 2022. This reflects longer average repair times, meaning that these vehicles are supplied for longer.
Payouts for vehicle theft, at £152 million, rose by 29% since Q1 2022. This in part reflects increases in the average price of second-hand cars, which have risen by 30% in three years (source: Auto Trader).
In addition, insurers paid out £642 million in respect of personal injury claims in the first quarter of this year, up 2% on the previous quarter. In the year ending Q1 2023, payments dipped by 11%. Early 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.
Laura Hughes, ABI’s Manager, General Insurance, said: “Motor insurers continue to deliver when motorists and personal injury claimants need them the most. Like most other business sectors, motor insurers face sustained cost pressures which they are finding increasingly challenging to absorb. Despite this they are doing all they can to ensure competitively priced motor insurance, as well as offering the best possible claims service.”
Our recently produced consumer information here sets out the range of factors involved in the pricing of motor insurance.
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