Insurance premiums laid bare

We reveal exactly where your money REALLY goes

A NEW report from the Association of British Insurers (ABI) has highlighted just what motorists are paying for, with ever-increasing policy costs.

Over the past year, annual motor premiums have increased by 10 per cent to an average of £434, as insurers have been forced to pay out nearly £8billion in claims.

As the graphic (above) shows, bodily injuries make up more than a third of money paid out, despite accounting for just nine per cent of claims. The average settlement in 2016 hit £10,995 – up four per cent since 12 months ago. The figures come just a week after the Government announced that plans to change the laws to end the right to cash compensation for minor whiplash injuries were no longer on the agenda.

The ABI also revealed in the report that increasingly complicated vehicle technology means the average repair bill has risen by more than 25 per cent in the past three years, to £1,665 in 2016.

However, despite these rising costs, the second biggest factor in premium price is insurers’ overheads, rather than payouts for uninsured drivers, theft or courtesy cars. James Dalton, ABI’S director of general insurance policy, defended this and said drivers benefit from a “very competitive” market.

He added: “Every motorist wants competitively priced insurance that meets their needs. Insurers are facing the perfect storm of rising costs from personal injury claims, repair bills and Insurance Premium Tax.

“This report highlights what insurers are doing to help keep the costs of motor insurance down, and what more needs to be done to ensure honest motorists get the best possible motor insurance deal.”

“Vehicle technology means the average repair bill has risen 25 per cent”