Predicted Increase of 10% for Vehicle Insurance Premiums in 2024
In 2024, a lot of sectors are feeling the lasting effects of inflation, and the motor industry is no different. In fact, motorists are expected to feel the hit when it comes to renewing their car insurance, with premiums predicted to increase by 10% in 2024. So why are premiums set to increase, and what’s driving the price of rising costs, even if your driving has been perfect for the previous 12 months?
Material Costs
Whenever a car breaks down or becomes involved in a collision, new materials will have to be sourced to carry out the repairs required to get your vehicle back in working order. However, thanks to a number of factors, the prices of materials have continuously increased. One of the big shocks to the global automotive industry was the COVID-19 pandemic and the succession of lockdowns, which slowed down production of car parts across the globe.
In addition to this, other shocks like the war in Ukraine and issues with shipping routes have also had an impact, such as the Ever Given getting stuck in the Suez Canal in 2021 and recent attacks by Houthi rebels in Yemen on the same route. Factor in frictions with trade imports and exports surrounding Brexit post-2020, and you have a perfect storm which has led to parts becoming more difficult to obtain and inflation having an effect on prices.
These numerous supply chain issues have subsequently had an impact on the overall cost of repairs, which impacts a payout from your insurance policy. And if the cost of a potential payout increases, then so do insurance premiums, even if you haven’t made a claim.
Labour Costs
In addition to the increase in material costs, labour costs are also having an effect. With car and vehicle repairs being a specialised profession, it requires particular skills in order to repair a car effectively and efficiently. Thanks to the increase in inflation and the pressures associated with the cost of living, the cost of mechanics has also increased. Whilst in some cases this may not have risen in line with inflation, it’s still another rise in costs to add to the list.
Just like material costs, this can have an impact on your insurance, meaning premiums will rise as the potential cost of a payout increases.
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The Price of Vehicles
In 2023, the market saw an overall increase in the cost of cars, which in of itself has been impacted by many of the factors already mentioned. But the average increase in costs also has a tangible effect on the cost of your car insurance policy. After all, one of the major factors insurers look at is the price of the vehicle.
If more expensive cars are written off entirely, then the payout would have to be much higher than in the past, also meaning an increase in the premium. And as proven with material and labour costs, prices for repairs on more expensive vehicles will also have a similar effect.
In 2024, the market is expecting to see the price of cars maintain at the levels seen in 2023.
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