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Post-lockdown claims and supply chain problems push up car insurance

Post-lockdown claims and supply chain problems push up car insurance

29th April, 2022

Motorists may face rising car insurance premiums as a “double-whammy” of post-lockdown claims and supply chain issues starts to bite, the Association of British Insurers (ABI) has warned.

Last year motorists paid an average of £434 for comprehensive motor insurance - the lowest annual figure since 2015, according to a recent update from the ABI’s Motor Insurance Tracker.

Reduced traffic numbers during the 2020 and 2021 lockdowns led to sharp drop in claims and companies were able to pass on savings to customers.

Reforms from May 2021 intended to deter fraudsters from making false whiplash claims were expected to cut insurance premiums by £35, according to estimates by the Ministry of Justice.

Now, premiums are starting to creep up, with the average annual premium £11 higher in the fourth quarter of 2021 than in the third quarter.

Laura Hughes, the ABI’s Manager, General Insurance, said: “While we expect the motor insurance market to remain highly competitive in 2022, rising costs for parts, repairs and other supplies and services will continue to put pressure on premiums for motor insurance for both new and existing customers.

“Insurers appreciate that many households are facing a cost-of-living squeeze with rising household bills as costs rise in other areas of the economy, and they will be doing all they can to ensure competitively priced motor insurance, in the face of the variety of cost pressures faced.”

The ABI also highlighted new regulations brought in by the Financial Conduct Authority (FCA) this year to stop insurers quoting renewing customers more than they offer new customers. You can read more about this here.

Ms Hughes added: “While the FCA pricing rule changes may well lead to fewer introductory discounts, it should still pay to shop around for the best deal for your needs.”

As a broker, it’s our job to find our customers the right policy at the right price. In line with the rest of the industry, we saw a price increase due to new regulations introduced by the Financial Conduct Authority at the start of the year. However, we would like to reassure you that we are continuously working with our trusted panel of insurance providers to keep our prices as low as possible.

“Insurers appreciate that many households are facing a cost-of-living squeeze with rising household bills as costs rise in other areas of the economy, and they will be doing all they can to ensure competitively priced motor insurance, in the face of the variety of cost pressures faced.”

The ABI also highlighted new regulations brought in by the Financial Conduct Authority (FCA) this year to stop insurers quoting renewing customers more than they offer new customers. You can read more about this here.

Ms Hughes added: “While the FCA pricing rule changes may well lead to fewer introductory discounts, it should still pay to shop around for the best deal for your needs.”

As a broker, it’s our job to find our customers the right policy at the right price. In line with the rest of the industry, we saw a price increase due to new regulations introduced by the Financial Conduct Authority at the start of the year. However, we would like to reassure you that we are continuously working with our trusted panel of insurance providers to keep our prices as low as possible.

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* Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

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