27 February 2024 , 09:05
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The Association of British Insurers (ABI) has announced plans to tackle the rising cost of car insurance.
They have suggested several steps that could be taken by the industry, government or regulators. These include making it clearer which cars are more expensive to insure, helping people make better choices.
The ABI is also considering working with the police to recover stolen cars from ports and finding ways to prevent car thefts with vehicle manufacturers, the Mayor of London's office and the National Police Chiefs' Council. They believe that continuing to fight fraud and uninsured driving will lower the costs for law-abiding drivers.
According to the ABI, the average price for car insurance in the last three months of 2023 was about a third, or £157, higher than the same time the previous year. From October 1 to December 31, 2023, the average price for private car cover was £627, up from £470 during the same period a year earlier.
The ABI also pointed out that insurance premium tax (IPT), which adds £67 to the average policy, is another source of costs. IPT is a tax on insurers that customers end up paying. The Association of British Insurers (ABI) is planning to commission research into how social policies can help low-income households manage their insurance costs.
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This will be done with the help of its Consumer Advisory Group, which includes consumer champions and organisations like Which?, Citizen's Advice and Fair by Design. These plans have been revealed ahead of the ABI's wider financial inclusion strategy publication.
The strategy aims to help consumers better understand and access insurance, protection and long-term savings products. The ABI also said that its members are promising to explain more clearly how insurance premiums are calculated and what customers can do to lower costs.
This includes giving more detailed explanations when renewing and buying policies. Factors such as longer repair times, higher repair costs, and the increasing price of replacement vehicles have contributed to the rise in premiums. The increase in repair costs is due to a combination of labour prices, energy costs, and cars becoming more advanced, with electric vehicles needing more specialist skills to fix.
Recent research from consumer group Which? showed that car insurance customers who pay monthly can end up paying hundreds of pounds more than those who pay annually. The ABI said that they are also checking out premium finance, which allows you lot to pay l each month instead of all at once.
Mervyn Skeet, director of general insurance policy said: "We will continue to do what we can under our new strategy to help consumers access the products that are integral to financial wellbeing and play a key role in the nation's financial resilience."