A new survey from the Association of British Insurers (ABI) revealed that the average comprehensive motor insurance premium paid has increased by 9% over the last year adding an extra £38 to the average policy.

The ABI’s Quarterly Motor Insurance Premium Tracker – which surveys what consumers actually pay for their cover – shows that in the third quarter of the year:

  • The average price paid for comprehensive insurance was £440 up 1% on the second quarter of the year.
  • Compared to the same period last year the average premium paid has risen by 9% from £402, adding an extra £38 to the average price paid for comprehensive cover.
  • Factors that are contributing to the rising costs of motor insurance include:
  • A 5% increase in the average bodily injury claim settled so far this year to £10,955.
  • Vehicle repair costs that have risen 25% in the last three years to an average of £1,665
  • A two-thirds rise in the rate of Insurance Premium Tax in less than a year. This is now likely to add an extra 10% to the cost of motor insurance.

ABI motor and liability head Rob Cummings said: “Insurers are fighting the corner of hard-pressed motorists, despite facing a triple whammy of rising costs from personal injury claims, repair bills and Insurance Premium Tax.

“The Government has a key role to play in ensuring the best insurance deals for honest motorists. They need to urgently consult on the planned reforms to address the compensation culture, which honest motorists have been waiting nearly a year for them to introduce, and avoid any further hikes in Insurance Premium Tax.”

The ABI recently released a five-point action plan for a fairer insurance deal for honest motorists:

Further reforms to the personal injury compensation system. While further plans to stem frivolous and exaggerated personal injury claims have stalled, with the number of soft tissue injuries rising, the Government needs to push much-needed reform higher up its ‘to do’ list. This delay is costing motorists nearly £3m a day, and encouraging claimant lawyers and claims management companies to exploit the system at the expense of honest motorists. 

No further rises in Insurance Premium Tax (IPT). Successive rises have seen IPT jump by two-thirds in just under a year to 10%.These recent rises alone are likely to add an extra £16 a year to the cost of the average comprehensive motor policy. The Government must not increase this raid on the responsible, which hits people who have done the right thing in taking out insurance.

Making young drivers safer. The Government should introduce changes to how young people learn to drive, such as Graduated Driver Licensing. This could help make them safer drivers, and help lower their motor insurance costs.

Incentivising the development of safer vehicles. Autonomous Emergency Braking (AEB) is proven to reduce the frequency and severity of vehicle collisions, and the Government should consider making AEB compulsory for all new vehicles. Insurers already recognise this safety feature through a cheaper insurance group.

Autonomous vehicle technology could further improve road safety, which is why insurers support its development.

Tackling insurance fraud. In 2015 insurers detected 70,000 fraudulent motor insurance claims valued at £800m. This is £800m saved for honest customers. The industry will step up its clampdown on the cheats to protect honest customers, and the Government should implement the recommendations of the Insurance Fraud Taskforce.