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Millions of motorists 'priced out' of car insurance over the past year

by Justin Marsh
December 13, 2024
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Millions of motorists no longer drive in the UK because they have been priced out of the car insurance market, according to research.

Citizens Advice (CA) found that 2.6m people complain about the mounting cost of premiums.

This includes nearly 900,000 drivers who have had to cancel their cover in the past 12 months, in addition to 1.7 million people who have left the market for longer than a year.

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The study said the price of car insurance rose 40 per cent in the past two years and found the average cost of car insurance for the last 12 months was £812 – but runaway costs are hitting some harder than others.

Young people (18-34) pay twice as much for car insurance as middle-aged adults (35-54) and 56 percent of them pay monthly for their premiums, which tend to be more expensive than an annual layout.

One in four people receiving benefits has fallen behind on their insurance payments in the past 12 months, compared with just over one in 10
(11 percent) of drivers overall.

They are also almost twice as likely to have had to borrow, cut back on essentials (33 percent), or fall behind on other bills (18 percent) to pay their car insurance.

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The average cost of car premiums is £546 higher for ethnic minorities compared to white drivers.

CA chief executive Dame Clare Moriarty is concerned a hidden affordability crisis is affecting millions.

She said: “Car insurance is essential for so many people but a shocking number of people are excluded.

“Bold action must be taken to tackle skyrocketing costs. We need a market that works for everyone, leaving unaffordable insurance premiums behind once and for all.”

CA is concerned that some motorists may break the law by canceling their insurance but continuing to drive, affecting accident claims.

The latest survey comes after new data from the Financial Conduct Authority revealed the average British car insurance premium has risen by 21 per cent since June 2022 – much more than in France, Germany and Spain.

Earlier this year, Citizens Advice told the Transport Select Committee that some people are “having to make impossible choices of whether to pay for their car insurance or put food on the table”.

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A spokesperson for the Association of British Insurers (ABI), an industry trade body said: “Insurers understand how vital driving is for everyday life, and want to do all they can to support motorists.

“Over the past 12 months, motor insurers have paid out £11.3bn in claims, and continue to face significant cost pressures from labor shortages, parts delays and broader price inflation. However, our latest data shows that the average cost of motor insurance dropped by 2 per cent in the third quarter of this year, which follows a 2 per cent drop in (the second quarter of) 2024.

“The industry is determined to keep motor insurance as competitively-priced as possible. Our 10-point road-map sets out steps that the industry and government can take to tackle insurance costs for all drivers, and we're also committed to playing our part in supporting the government's motor insurance taskforce.”

The ABI said it considers a wide range of risk-related factors when calculating the price of a car insurance policy, commonly including age, driver experience and the type of vehicle.

According to the ABI's figures, the average price paid between July to September for annual motor insurance was £612, which was £50 (9 per cent) higher than the same period in 2023.

The government has set up a task force jointly led by Transport Secretary Heidi Alexander and Tulip Siddiq, Economic Secretary to the Treasury. The taskforce also includes other departments such as the Ministry of Justice and Department for Education, plus the regulatory bodies the Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA).

The taskforce also created a including insurance industry groups as well as consumer groups such as Citizens Advice and Which? together with the car manufacturers, the Society of Motor Manufacturers and Traders.

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Source

Tags: 39pricedcarinsuranceMillionsmotoristsout39year

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