Average motor insurance costs rose slightly in Q2 2019, signalling an end to the decreases enjoyed in the previous five quarters, according to Association of British Insurers (ABI) figures.
The Association of British Insurers’s (ABI) monthly premium tracker reports that the average price paid for motor insurance in Q2 rose to £467, an increase of £1 on the previous quarter.
This follows a five-quarter period of consecutive falls, with a £15 fall recorded in Q1 2019.
Spiralling vehicle repair costs, driven by ever more complex cars and the impact of the falling pound on the cost of imported parts, continue to add significant cost pressures to insurers, according to the ABI.
Repair costs are rising, reflecting ever more sophisticated vehicle design and technology, which in most cases costs more to repair when damaged.
Current figures show that the repair bill for insurers in Q1 2019 was £1.2 billion, the highest quarterly figure since the ABI started collecting this data in 2013.
In the first three months of this year, the cost of theft payouts rose 22% to £108 million on the same period last year. The rise reflects Home Office figures recording a 50% rise in vehicle thefts over the last five years. The increase is in part being driven by keyless car crime.
The ABI warned that the new discount rate, set to take effect from next month, will put further pressure on insurers.
Mark Shepherd, assistant director and head of general insurance policy at the ABI, said: “The recent decision on the discount rate is bad news for motorists that will simply add to insurers costs rather than save customers money, at a time when vehicle repair bills and theft claims are rising.”
“Motor insurance remains a highly competitive market, but some motorists may in the future have to search harder to get the right policy for their needs at the best price. This makes it more important than ever that the whiplash reforms in the Civil Liability Act are implemented on time and in full.”
Commenting on the figures from the ABI, David Williams, managing director of underwriting and technical services at AXA Insurance UK, said: “It’s a real shame to see motor insurance premium reductions stall, particularly at a time when the general public will be expecting to see lower prices, having been promised them on the back of the civil justice reforms.”
“In addition to the rapid rise in theft claims, and the increase in vehicle repair costs, the justice secretary’s decision to reduce the discount rate by 0.5% below the recommendation from the Government Actuary’s Department will have a significant impact.”
“It is now even more important that the planned whiplash reforms and changes to the small claims track be delivered effectively and on time, to avoid a complete loss of confidence from the insurance-buying public who are expecting premium reductions.”