Motor premiums hit the fast lane

2017 looks like it is going to be a busy year, and the effect of various reforms are going to impact on motor premiums.  Where are we right now?

The ABI’s latest monthly premium tracker showed that the average motor premium in the last quarter of 2016 was £462 – the highest in any quarter of the last 12 months.  It has risen 5% compared to the previous quarter, and 7.4% when compared to the last quarter of 2015.  The quarterly survey from confused.com, which uses slightly different criteria, found a rise of 14% on the same period 12 months ago, to an average of £767 on quoted premiums.  The ABI blame a ‘cocktail’ of rising costs, including the IPT increase, whiplash claims and rising repair bills – saying the average repair bill has risen by nearly 32% in the last three years up to £1,678 in the third quarter of 2016, due to increasingly complex vehicle technology.

The latest claims figures also show a concerning position for insurers.  While the total number of claims notified in 2016 has decreased slightly by 1.17% since 12 months previous, the cost of claims has increased by 14.8%, reaching £233.3m.  The average claim value is now £5,056, 16.4% higher than 2015.

While the whiplash reforms are pushing ahead, with much made about the expected decrease in premiums, the recent discount rate announcement is going to have a serious impact on any effect whiplash reform will have on actual premiums.  

With so much uncertainty in the market, there is no doubt going to be a bumpy few months ahead, and premium and claims data will be scrutinised with interest.  Whether whiplash claims, repair bills or catastrophic injury cases, all areas of the claims process will need to be carefully re-examined in 2017 to see what can be controlled.