Car insurance prices continue to rise with the latest data showing drivers were paying £157 more at the end of 2023 than the previous year.
Research from the Association of British Insurers (ABI) found that costs for insurers are up by 12 per cent as a result of record increases in the cost to pay claims.
This means motor cover was 25 per cent more expensive on average across the whole of 2023 than it was in 2022.
Between October 1 and December 31, 2023, the average premium paid for private motor insurance was £627 while the current average premium is 34 per cent higher compared to the same period in 2022.
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Motor cover was 25 per cent more expensive on average across the whole of 2023 than in 2022
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The ABI highlighted how the increased costs were coming from longer repair times, higher repair costs and the rising cost of providing replacement vehicles for drivers.
Insurers have been struggling with rising costs as a result of vehicles becoming more technologically sophisticated, requiring the work of specialist repair technicians.
Mervyn Skeet, the ABI’s Director of General Insurance Policy, said: “We’re acutely aware of the impact that rising motor insurance premiums continue to have on motorists.
“Rising repair costs and other factors outside of insurers’ control mean there is no single action that could bring down premiums. However, we are determined to do all we can to put the brake on.
“We are working with our members to understand what actions can be taken to help motorists manage costs.
“The cost of paying monthly (premium finance) is one of a number of topics we continue to discuss with our members and the Financial Conduct Authority (FCA).”
Mervyn Skeet has also continued to call on the Government to intervene to help cut costs across a number of different types of insurance.
The Insurance Premium Tax (12 per cent) currently adds £67 to the average motor premium and is usually passed onto the driver by the insurance company.
He said cutting IPT would provide “immediate relief for stretched consumers”, with the ABI expected to outline further steps in the coming weeks ahead of the March 6 Budget.
As drivers continue to get hammered by rising car insurance prices, alongside other expensive motoring costs, many are hoping the Government will take action in the Spring Statement.
Set for March 6, all eyes will be on Chancellor Jeremy Hunt and his actions on car insurance, fuel duty, car tax and other important measures.
The ABI and other motoring groups have called on the Government to cut Insurance Premium Tax so drivers receive instant cuts to the price they pay for insurance.
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Jeremy Hunt is set to unveil the Spring Budget on March 6
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Speaking before the 2022 Autumn Statement, Hannah Gurga, Director General of the ABI, said: “With many families and businesses facing tough financial decisions, the last thing they need is a rise in Insurance Premium Tax.
“Any increase in the rate of IPT at this time would likely impact those who continue to be most vulnerable to the cost of living crisis and we urge the Government to keep the rate frozen.”
