Are you able to please examine whether or not Britain’s automotive insurers are utilizing the price of dwelling disaster as an excuse to push although unjustified, above-inflation premium will increase?
After I was complaining to a colleague, who works within the automotive insurance coverage enterprise, that insurance coverage on my electrical VW Golf had doubled, he despatched me some claims information that seems to counsel the rise is totally unjustified.
I’m certain prices have gone up, however I don’t consider that it’s anyplace close to what’s being claimed.
Might it’s that insurers are taking us for a journey?
NP, by e-mail
It’s a really fascinating, and a extremely pertinent, query.
Virtually everybody I do know has seen their automotive insurance coverage enhance by 40%-50% in latest months.
Final month, the Guardian reported that everybody beneath the age of 43 is dealing with common premiums of near £1,000 this 12 months – a 58% enhance on final 12 months.
The trade – led by the Affiliation of British Insurers (ABI) – has been falling over itself to inform us how a lot its prices have been rising, arguing that the “largest single issue” is restore prices.
It mentioned insurers have been reporting a 32% rise between the third quarter of 2022 and the identical interval of 2023.
However your information suggests they usually rose by about 6% between April and November 2023. That is just for eight months – the annual equal is about 9%, lower than a 3rd of what the ABI has claimed.
Your figures, which you will have been advised are from “throughout the trade”, present that the typical insurance coverage restore for a petroleum/diesel Ford rose from £2,370 in April 2023 to £2,483 eight months later – that’s a 5% enhance.
For VWs, the typical restore invoice following a crash in a non-EV mannequin rose from £2,595 to £2,753 – a 6% rise.
It’s the same story for Vauxhalls at 5%, whereas Toyota restore claims rose nearly 6% to a mean of £2,319, the information reveals.
Within the electrical automotive market, which has seen among the steepest premium will increase – typically doubling – the information means that the typical restore to a Tesla rose from an already-hefty £5,021 to £5,342 over the eight months – a 6.4% enhance.
Restore claims for the favored MG electrical fashions rose from a mean of £2,358 to £2,812 – a 19% enhance. That is by far the largest rise within the desk, however nowhere close to the 32% the ABI has quoted.
The EV figures seem like broadly confirmed by the information analytics agency Gecko, which says the typical price to restore a battery electrical automobile stands at £3,012.
Vexed readers have to be conscious that these figures solely cowl payments following an accident or comparable.
Vehicles which can be written off – an rising development – and claims that come up after a automobile is stolen, don’t function on this information. Automobile thefts rose from 104,435 in 2021 to 130,389 in 2022 – a 25% enhance – and this development appears more likely to be repeated for 2023 when the newest figures are launched in Could.
Nevertheless, keep in mind that there are greater than 40m automobiles on UK roads, so thefts characterize a tiny proportion of claims.
I requested the ABI about your figures, and the distinction between the will increase they present, and those it cited.
It tells me: “It’s inaccurate to check these common restore prices from one agency with our information assortment. Our information is predicated on the cash our members, who write nearly 28m insurance policies, have paid out in claims every quarter.
“The most recent assortment reveals that motor insurers paid out £2.54bn on claims within the third quarter of final 12 months, 21% greater than the identical time in 2022. In the identical interval, the quantity paid out for automobile repairs jumped 32%, as much as £1.6bn.”
Final summer time the chancellor, Jeremy Hunt, requested Britain’s watchdogs to agree an “motion plan” amid issues over “greedflation”: that’s corporations utilizing rampant inflation as a canopy to hike costs and increase income.
Automobile insurance coverage prices are quickly changing into an enormous drain on many households’ funds.
Is it time for a Competitors & Markets Authority investigation?
