Skip to main content

Driving during a Cost-of-Living Crisis: UK Motor Insurance Premium Increases

Driving during a Cost-of-Living Crisis: UK Motor Insurance Premium Increases

Driving during a Cost-of-Living Crisis: UK Motor Insurance Premium Increases.

If you’ve found yourself clutching your wallet tighter than your steering wheel, you’re not alone. It seems like the cost of everything is skyrocketing. But why are motor insurance premiums joining the inflation party?

The actual number of accidents on UK roads remains low according to Government records. Since the all-time high of 299,000 collisions in 1965 – numbers have reduced significantly. We need to go back to 2004 for the last year with over 200,000 accidents recorded.

At the height of the pandemic in 2020, there were only 91,199 collisions. Marginal increases followed in 2021 (101,087) and 2022 (106,004), but the figures remain comparatively small. The table below shows the official figures held between 2004 and 2022.

2004207,410 2014146,322
2005198,735 2015140,056
2006189,161 2016136,621
2007182,115 2017129,982
2008170,591 2018122,635
2009163,554 2019117,536
2010154,414 202091,199
2011151,474 2021101,087
2012145,571 2022106,004

Despite the downward trend, the Association of British Insurers’ (ABI) have advised that premiums rose on average by 25% in 2023. That is the highest jump in premiums ever recorded. It is worth noting the ABI only started collating figures in 2012. That average of 25% is also based on what customers are actually paying, not “what they are quoted” – which suggests insurers are demanding more at the first time of asking.

To put it in real money terms, for a policy costing you £500 in 2022, you would be paying £625 a year later for the privilege. An unavoidable privilege. We all need to be insured or we cannot legally get behind the wheel. 

The average fully-comp insurance policy now totals £635. That is presumably only if the premium is paid upfront and not monthly. I can’t give you figures for that – because they are not broken down (or readily available).

Even if your circumstances are identical to the previous year, or in most cases better (another year of no claims anyone?), quotes are increasing by as much as £150 without explanation. All you will receive is your renewal quote and a reminder to shop around. 

How do the insurers justify these increases? In a nutshell, increasing costs and inflation. A few years ago, it was apparently the cost of pursuer PI claims. The Whiplash reforms in England and Wales massively reduced that burden on insurers. They now have set their sights on vehicle repairers and parts traders.

The ABI explain that for every £1 paid in premiums, there is £1.14 paid out in claims by insurers. Clearly then they are all operating at a loss?

The founder of Direct Line, Esure, Sheilas’ Wheels and Go Compare reportedly holds a net worth of around £860 million. They were, in 2021, assumed to be only the 4th wealthiest insurance tycoon…

For now, we will need to continue changing our motor insurers regularly to get the best deal. Much in the same way we already do with our energy, tv and broadband providers.

For further information, please contact a member of the Personal Injury team on 0800 731 8434.

About the author

Jamie Lyons
Jamie Lyons

Jamie Lyons

Senior Solicitor

Personal Injury

For more information, contact Jamie Lyons or any member of the Personal Injury team on +44 1382 346282.