Car insurance premiums hit record high

This dramatic increase in prices reflects the “sustained cost pressures” facing insurers – who paid out £2.4bn in motor insurance claims in the first three months of 2023 – with vehicle repair costs surging 33pc over the year to £1.5bn, the highest figure since the ABI started collecting this data in 2013.

One insurer saw labour rates jump 40pc between June 2022 and January 2023, according to the ABI. Meanwhile, the cost of replacement parts for many popular cars have risen by as much as a fifth over the past year.

Rules introduced by the Financial Conduct Authority in January 2022 ensure that customers renewing their motor or home insurance do not pay a higher price than new customers for the equivalent policy bought through the same insurer, broker, or price comparison website. However, these rules do not cap the level of premium customers pay.

Jenny Ross, of the consumer association Which?, said: “Car insurance premiums reaching record highs comes at the worst possible time for consumers already battling cost pressures in a number of other areas, and motorists may be wondering whether insurers passing on increased costs is justified at this time.

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