Association of British Insurers: Stuck in Overdrive! Record Motor Insurance Payouts Keep Motorists Moving

LONDON, England, Nov. 30 -- The Association of British Insurers issued the following news:

Lifting the lid on what has been driving motor premium rises.

* Payouts up 21% in the third quarter to a quarterly record.

* The equivalent of pound sterling4,821 paid out every minute.

Motor insurance payouts by insurers jumped by 21% in the third quarter of the year, compared to the same period last year surpassing pound sterling2.5bn for the second consecutive quarter according to latest ABI figures published today. The pound sterling2.54bn paid is the highest quarterly payout, since we started collecting this data in 2013.

Insurers paid out the equivalent of pound sterling4,821 and settled 4 claims every minute during the quarter.

Our data shows that in the third quarter of this year:

* In total insurers paid out pound sterling2.54 billion in motor insurance claims - theft, repairs, replacement vehicles and personal injury. This was up slightly at 1% on the previous quarter, and a leap of 21% on the pound sterling2.1 billion paid in Q3 2022. The overall number of claims settled, at 570,000, rose 5% on the same quarter last year.

* The cost of vehicle repairs jumped 32% to a quarterly record pound sterling1.6 billion. This reflects continued rising costs. Some insurers have reported further Q3 increases of 16% for materials, 15% for labour and 46% for other costs, largely driven by the price of energy.

* The cost of providing replacement cars while vehicles were being repaired jumped 47% to pound sterling160 million, compared to pound sterling108 million paid in Q3 2022. This largely reflected longer average repair times, meaning that these vehicles needed to be provided for longer.

* Payouts for vehicle theft (of and from a vehicle), at pound sterling178 million, rose by 35% on the pound sterling132 million paid in Q3 2022.

Higher costs have impacted on the price of cover, with the average price paid for motor insurance at pound sterling561, up 29% over the last year (ABI Motor Insurance Premium Tracker, Q3 2023).

As part of the overall payout figure, insurers paid out pound sterling611 million in personal injury claims in the third quarter of this year, up 2% on the previous quarter, but down 5% on the pound sterling647 million paid in Q2 2022. This yearly fall points to the continued impact of the whiplash reforms introduced in 2021. The development of the Official Injury Claim (OIC) service was a huge undertaking, and insurers are committed to continue working with the OIC, the Ministry of Justice, and claimant representatives and others to help to deliver a simplified, more efficient and fairer compensation system.

Mervyn Skeet added:

"Significant and sustained cost pressures faced by insurers, such as a 32% rise in repair costs over the last year, have impacted on the cost of cover. Despite this, insurers continue to do all they can to ensure competitively priced motor insurance. These continue to be tough times for many families facing higher cost of living bills, and anyone concerned about being able to afford their insurance should speak to their motor insurer to see what options might be available. And it can still pay to shop around to get the policy that best meets your needs at the most competitive price."

As insurers continue to face significant cost pressures, we are working with industry bodies, such as the Society of Motor Manufacturers and Traders (SMMT) and Thatcham Research, to understand areas of shared concern between manufacturers and insurers, such as vehicle safety and security.

The Association of British Insurers is the voice of the UK's world leading insurance and long-term savings industry. A productive, inclusive, and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.

More news and information from the ABI is available on www.abi.org.uk

* * *

Original text here: https://www.abi.org.uk/news/news-articles/2023/11/record-motor-insurance-payouts--q3/