Published by: Financial Conduct Authority
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Key Take Aways
Motor insurance premiums increased notably between 2022 and 2024, placing affordability pressure on consumers amid rising claims costs.
Claims costs related to vehicle repair, property damage, and accidental damage constitute 65% of overall claims growth, driven by longer repair times, more complex vehicles, labour shortages, and higher parts costs.
Average claims costs surged by 37% from 2019 to 2023, with a 41% rise in claims cost per policy, reaching nearly £400 in 2023 despite claims frequency decreasing.
The overall claims incurred increased by £2.3bn (34%) over the period, predominantly driven by accidental damage, property damage, and theft.
Underwriting profitability deteriorated amid claims ratios exceeding 67%, with many firms experiencing underwriting losses in 2022 and 2023 due to claims inflation.
The cost of bodily injury claims, while not increasing as rapidly, saw substantial growth...
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