Claims payouts hit UK insurers as drivers face rising cover costs
Motor insurers paid out a record amount in claims last year, according to the Association of British Insurers (ABI).
The £9.9 billion paid out in 2023 is the highest annual figure since the ABI started collecting data in 2013.
The total was up by 18% on the £8.4 billion paid in 2022.
The overall number of claims settled, at 2.3 million, also rose by 10% compared with 2022.
The cost of vehicle repairs at £6.1 billion jumped by 31% compared with 2022.
This reflected continued rising costs, with insurers reporting increases for materials, and labour, the ABI said.
It added that garages also faced rises in their energy costs during 2023.
Payouts for vehicle theft and thefts from vehicles also jumped, to £669 million.
This total, and the average theft of a vehicle claim of £12,600, were both the highest on the ABI's records.
The cost of providing temporary replacement vehicles, at £597 million, increased by 35% compared with 2022.
This represented another annual record since this data has been collected.
As part of the overall payout figure, insurers paid out £2.4 billion in personal injury claims, a figure which was down by 8% on the previous year's total of £2.6 billion.
Higher costs have also impacted the price of cover paid by motorists, with the average price paid for motor insurance in 2023 put at £543 by the ABI, 25% more expensive than in 2022.
The ABI recently published details of actions that could be taken to tackle motor insurance costs.
This included the industry doing more on transparency around which vehicles were more costly to insure, to help people make more informed choices, and continuing to crack down on fraud.
Longer repair times, higher repair costs, and the rising price of replacement vehicles had been adding to the cost of premiums.
The ABI also highlighted insurance premium tax (IPT) as a source of costs, saying it added £67 to the average policy. IPT is a tax on insurers which feeds into the costs customers pay.
Jonathan Fong, the ABI's manager, general insurance policy, said: "Significant and sustained cost pressures faced by insurers, such as a 31% rise in repair costs over the last paid out in 2023 is the highest annual figure since the ABI started collecting data in 2013. year, have impacted on the cost of cover.
"Despite this, insurers continue to do all they can to ensure competitively priced motor insurance."
An ABI spokesperson added: “Our members fully understand the importance of providing fair value to customers and work hard to deliver it. Our data shows that 97% of private motor insurance claims are accepted, and the average claim is over £4,000.
“Understanding what your policy includes and any
The total was up by on the £8.4 billion paid in 2022. excesses involved is vital and our members are committed to ensuring information is presented in a way that is as straightforward as possible.
“We would always recommend shopping around to find the policy that best suits your needs.”