ABI reports motor premiums fell for the first time in two years

The average price paid for comprehensive motor insurance in the UK fell to £622 in the second quarter of 2024, according to the Association of British Insurers (ABI), the first fall in two years¹. The figure was reported by the ABI in August 2024 and is cited in a House of Commons Library briefing on the rising cost of UK car insurance¹.

The same ABI series shows how far prices had risen before that point. In the second quarter of 2021, the ABI said prices had fallen to a five-year low, averaging £430 for comprehensive cover¹. By the second quarter of 2024 the average had reached £622, an increase of 45% over three years¹.

That is a smaller rise than the one recorded by the Office for National Statistics (ONS), whose data measures new customer quotes rather than prices paid. The ONS series shows car insurance prices up 85% over the same period, against 45% on the ABI's figures¹. The briefing notes that because the UK statistics only measure new customer quotes, they may overstate price rises across the whole sector¹.

The wider context is a sharp rise in quoted prices since mid-2021. Between May 2021 and June 2024, the price of consumer goods and services in general rose 21%, while the quoted price of car insurance rose 82%¹. Part of that reflects a low starting point: prices had fallen 16% between March 2020 and May 2021, leaving premiums at their lowest level since late 2015, as lockdowns reduced car use and the number of cars involved in collisions in Great Britain fell from 158,000 in 2019 to 117,000 in 2020¹.

Cost pressures after the pandemic included spare parts shortages. In February 2023 the ABI reported that an estimated 40% of insurers' work was being affected by parts delays, and that energy inflation added around £72 to each repair¹. The ABI also says it costs more to repair modern and electric cars, and notes that car thefts have risen in recent years¹.

The briefing suggests this change may be part of the reason UK prices rose faster than those in the EU, where car insurance rose 19% in the three years from May 2021 against 82% in the UK, despite similar general consumer inflation of 20% in the EU and 21% in the UK¹. It notes there is still not a full understanding of why prices have changed so much more in the UK than in the EU¹.

Why it matters for households

Car insurance is mandatory for drivers, and the briefing notes that seven in 10 UK adults say their lifestyle requires having a vehicle, according to the market research company Ipsos¹. The ABI figure of £622 is an average across comprehensive policies, so individual premiums vary with the driver, the vehicle and the cover chosen. How those prices are built up, including the effect of Insurance Premium Tax, is set out in our guide to how insurance premiums are worked out.

The quarterly fall is a single data point from one industry series, and the two main UK measures disagree on the scale of the increase since 2021: 45% on the ABI's prices-paid data against 85% on the ONS's quote-based data¹. Households renewing cover will see their own quoted price, which may differ from both averages.

The Financial Conduct Authority, the industry regulator, has banned firms from charging returning customers more than new ones, but does not cap the price of insurance¹. The briefing also records that the government has removed a requirement that car insurance covers driving on private land and changed how whiplash claims are processed¹. More on cover and pricing is in our insurance section.

What happens next

Ahead of the 2024 general election, the Labour Party indicated it would ask the FCA and the Competition and Markets Authority to look into price rises in the sector¹. What such reviews might recommend is uncertain, the briefing says¹. It also cites EY forecasting further price rises this year¹. No date has been reported for any review.