Why Have Vehicle Premiums Massively Exceeded the Expected Rate in 2024?
If you’ve noticed that your car insurance premiums have increased in 2024, even if you haven’t had to make a claim, then you’re not alone. Increased car insurance premiums are being felt across the board, even with people who have never had to make a claim and have a clean driving licence. So what are the reasons for these rises, and is there anything you can do about it as a driver to keep your premium steady?
How Much Have Premiums Increased By?
According to the Association of British Insurers, costs are up across the board by 12% when you compare Q3 of 2023 with Q4 of the same year. The average premium paid for private motor insurance came to £627, compared to £562 to the previous quarter.
And the increase is even more stark when comparing the figures to 2022. The premiums in Q4 2023 are 34% higher than that of the same period in 2022, where it was £470. And when you look at the averages across a whole calendar year, premiums were 25% more expensive in 2023 compared to 2022, where it was £543 vs £434.
These figures show a marked increase in the average cost of an insurance premium for a motor vehicle, and according to analysis by the Guardian, this is set to increase by 58% this year, with average premiums touching the £1000 mark. So what has been, and will be, driving these rising prices?
The Reason For Premium Increases
Usually, a reason why a premium increases is the result of a claim being made. It could also be due to changing circumstances such as age or your driving history. However, external factors like inflation are playing a larger part in insurance premium increases across the board.
In addition to this, the ABI also says that both vehicle thefts and longer repair times (driving up the costs of replacement vehicles) are contributing to this increase in premiums. But it’s repair costs that are the single biggest factor, which jumped 32% to £1.6bn. Overall, these figures mean that insurers are paying more on claims and costs than they’re collecting in premiums; for every £1 they’re getting in premiums, £1.11 is being paid out in claims and operating costs.
The large increases are something that the ABI is aware of for motorists and insurers alike, with the ABI’s Directory of General Insurance Policy, Mervyn Skeet, noting, “We’re acutely aware of the impact that rising motor insurance premiums continue to have on motorists.”
He continued, “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.”
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