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Is the automotive insurance coverage business driving up costs to take us for a experience? | Shopper affairs

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?

Once 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 recommend the rise is totally unjustified.

I’m certain prices have gone up, however I don’t consider that it’s wherever close to what’s being claimed.

Might it’s that insurers are taking us for a experience?

NP, by electronic mail

It’s a really attention-grabbing, and a extremely pertinent, query.

Nearly everybody I do know has seen their automotive insurance coverage improve by 40%-50% in latest months.

Final month, the Guardian reported that everybody under the age of 43 is going through common premiums of near £1,000 this yr – a 58% improve on final yr.

The business – 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 stated insurers had been reporting a 32% rise between the third quarter of 2022 and the identical interval of 2023.

However your information suggests they sometimes 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’ve been instructed are from “throughout the business”, 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% improve.

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 an identical story for Vauxhalls at 5%, whereas Toyota restore claims rose virtually 6% to a mean of £2,319, the info exhibits.

Within the electrical automotive market, which has seen a few of the steepest premium will increase – typically doubling – the info 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% improve.

Restore claims for the favored MG electrical fashions rose from a mean of £2,358 to £2,812 – a 19% improve. 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 info analytics agency Gecko, which says the typical price to restore a battery electrical car stands at £3,012.

Vexed readers have to be conscious that these figures solely cowl payments following an accident or related.

Automobiles which are written off – an rising development – and claims that come up after a car is stolen, don’t characteristic on this information. Car thefts rose from 104,435 in 2021 to 130,389 in 2022 – a 25% improve – and this development appears prone to be repeated for 2023 when the most recent figures are launched in Could.

Nonetheless, keep in mind that there are greater than 40m automobiles on UK roads, so thefts symbolize 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 match these common restore prices from one agency with our information assortment. Our information relies on the cash our members, who write virtually 28m insurance policies, have paid out in claims every quarter.

“The newest assortment exhibits that motor insurers paid out £2.54bn on claims within the third quarter of final yr, 21% greater than the identical time in 2022. In the identical interval, the quantity paid out for car repairs jumped 32%, as much as £1.6bn.”

Final summer season the chancellor, Jeremy Hunt, requested Britain’s watchdogs to agree an “motion plan” amid considerations over “greedflation”: that’s firms utilizing rampant inflation as a canopy to hike costs and enhance earnings.

Automotive insurance coverage prices are quickly turning into an enormous drain on many households’ funds.

Is it time for a Competitors & Markets Authority investigation?

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