The cost of car insurance soared 25% last year and the figures show the price rise is accelerating AGAIN

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  • The cost of car insurance continues to rise in 2023, with insurers blaming claims costs
  • The average driver paid £627 to insure their vehicle before the end of the year.

The average car insurance premium increased by 25 percent in 2023, according to official figures from insurers.

The average premium for 2023 was £543, compared to £434 in 2022, the Association of British Insurers (ABI) said.

Meanwhile, the typical driver paid £627 to insure their car in the final quarter of 2023, an increase of 12% on the previous three months, showing costs continue to soar.

The ABI said the sharp rise in premiums was due to insurers’ soaring claims costs.

The trade body said compensation for vehicle theft increased by 35% in the third quarter of 2023 (compared to the third quarter of 2022), according to its most recent figures.

Longer repair times increased the cost of providing replacement vehicles by 47 percent over the same period.

At the same time, the cost of replacing end-of-life vehicles has increased as the average cost of new cars increases (up 43 percent over a five-year period).

However, the biggest factor is repair costs, which jumped 32% in the third quarter to £1.6 billion, the ABI said.

This reflects both the cost of labor and energy, but also the fact that vehicles are becoming more and more sophisticated.

Early research suggests that electric vehicles cost around 25% more to repair than their petrol or diesel equivalents and take 14% longer to repair.

EY analysts estimate that for every £1 motor insurers received in premiums in 2022, they paid £1.11 in claims and operating costs.

However, this does not take into account the money insurers make from their investments, a crucial revenue source.

How prices rose quarter after quarter

Prices have soared throughout the year, with costs in the last three months up by a third compared to the final quarter of 2022.

Q1 2022 >> Q1 2023: 15%

Q2 2022 >> Q2 2023: 21%

Q3 2022 >> Q3 2023: 29%

Q4 2022 >> Q4 2023: 34%

Mervyn Skeet, director of general insurance policy at the ABI, said: “We are acutely aware of the impact that rising car insurance premiums continue to have on motorists.

“Rising repair costs and other factors beyond insurers’ control mean there are no measures to bring down premiums. However, we are determined to do everything in our power to slow this development.

Skeet also renewed the ABI’s calls for the Government to reduce the Insurance Premium Tax, or IPT.

IPT is a stealth tax that insurers pay on premiums and is set at 12 percent for car insurance.

The average car premium is inflated by £67 by IPT as insurers typically pass on the full cost.



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