We set out our findings on the causes of increased premiums, particularly increased claims costs, to support the work of the Motor Insurance Taskforce.
The review includes:
- Our analysis of the increases in motor insurance claims costs between 2019 and 2023, their causes and their impact on motor insurance premiums.
- Our proposed actions and recommendations to help improve the affordability of motor insurance.
Who this applies to
These findings and recommendations are relevant to:
- The Motor Insurance Taskforce.
- The Association of British Insurers and other insurance trade bodies.
- Insurance firms.
- Consumer groups.
- Other regulators and motor insurance-related organisations, including the Solicitors Regulation Authority, the General Medical Council, the Motor Insurers’ Bureau and the Insurance Fraud Bureau.
- Motor manufacturing and repair industries and affiliates.
Accident and claims management companies and credit hire and repair organisations.
What we did
We analysed claims costs from 2019 to 2023, reviewing firms’ claims handling arrangements and key cost drivers affecting different claim types.
What we found
We saw that higher motor insurance premiums have largely been driven by increases in claims costs. More complex and expensive cars, supply chain delays, a shortage of skilled labour, increased costs for replacement vehicles, rising bodily injury costs, increasing numbers of car thefts and a rise in costs associated with uninsured drivers have all contributed to rising claims costs. We have identified several areas where there may be scope for industry, government, regulators and others to act to manage or reduce claims cost.
Next steps
We are keen to engage with the Government Taskforce, industry, firms and other stakeholders to agree how to take forward our proposed actions and recommendations, with the aim of improving the affordability of motor insurance.