Car insurance payouts have hit a record high with insurers paying out billions last year to help cover vehicle damages and incidents, according to reports.
The Association of British Insurers revealed that insurance companies paid out £11.7billion in claims last year due to rising theft incidents and escalating repair costs throughout the year.
The average cost of motor cover reached £621 in the final quarter of 2024, showing a slight decrease from the £635 recorded at the start of the year.
However, the average cost of cover for 2024 stood at £622, marking a 15 per cent rise, equating to £78 more compared to 2023.
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Car insurance premiums cost roughly £621 for the average driver
GETTY
This substantial increase in premiums occurred against a backdrop of mounting pressure on insurers, with total claims payouts rising by 17 per cent compared to the previous year.
Insurers processed 2.4 million motor insurance claims throughout 2024, reflecting the scale of the challenge facing the industry.
The average private car insurance claim paid last year increased by 13 per cent from the previous year, reaching £4,900. Claims hit an all-time high in the final quarter of 2024, with the average payout reaching £5,300.
However, vehicle repair costs proved particularly challenging for the industry, totalling £1.9billion in the fourth quarter alone.
The ABI detailed how yearly repair bills reached a record £7.7billion, marking a £1.5billion increase compared with 2023.
Theft-related claims also saw significant increases, with the average claim for thefts of and from vehicles reaching £11,200 in the final quarter of 2024. These figures highlight the growing financial pressures facing both insurers and motorists, as rising costs continue to drive up premiums and payouts across the sector.
The latest data comes one year after the ABI launched its 10-Point Roadmap, aimed at addressing insurance costs through industry and government collaboration.
The initiative has made progress in several key areas, including efforts to tackle vehicle theft and crack down on insurance fraud.
Additional focus has been placed on combating uninsured driving and helping consumers make "better-informed decisions".The roadmap has also addressed the impact of the Person Injury Discount Rate.
The organisation has identified several areas where Government action could help combat high claim costs. These include addressing the skills and capacity challenges in the vehicle repair sector. The ABI has also called for improvements to UK roads and the implementation of the government's road safety strategy.
Mark Shepherd, Head of General Insurance Policy at the ABI said: "Our latest data paints a difficult picture for drivers and the industry alike.
"Through our 10-Point Roadmap, we've been working hard to help tackle the cost of motor insurance and we've seen progress in some areas, with average premiums having fallen from their peak.
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Car insurers paid out £11.7billion last year with the majority coming from theft claims
GETTY"However, we recognise that the price of cover remains a strain on household finances whilst the industry faces significant cost pressures. Industry is doing all that it can, but it is now for Government to take the necessary action to combat high claim costs."
He also warned against any potential increases in Insurance Premium Tax at the upcoming Spring Forecast, stating it would further impact "hard-working households and businesses."
