UK Vehicle Insurance Payouts Rise 29 Per Cent In Q2 2023

Vehicle insurers in the United Kingdom paid out £2.5 billion in claims in the second quarter of this year, up 29 per cent on the £2 billion paid in the same quarter last year, according to latest Association of British Insurers (ABI) data.

The association said the figure represents the highest quarterly rise since it started collecting data in 2013 and exceeds the 21 per cent rise in average motor insurance premium paid during the same period.

ABI data also shows that between 1 April and 30 June this year:

  • The payout, which covers theft, vehicle repairs, replacement vehicles, and personal injury, was up three per cent on the previous quarter. The overall number of claims settled, at 592,000, was up 18 per cent.
  • The costs of vehicle repairs leapt by 46 per cent over Q2 2022 to £1.5 billion, reflecting rising costs for insurers including energy inflation, labour rates, and more expensive repairs.
  • The costs of providing replacement cars while vehicles are repaired jumped 52 per cent from £103 million to £157 million, reflecting longer average repair times.
  • Payouts for vehicle theft, at £196 million, increased by 53 per cent on the £128 million paid in the same period last year. This in part reflects increases in the average price of second-hand cars, which rose by 28 per cent between April 2021 and June 2023, according to Auto Trader.

As part of the overall payout figure, insurers paid out £602 million in personal injury claims in the second quarter of this year, down six per cent on the previous quarter’s figure of £642 million, and down eight per cent on the £651 million paid in Q2 2022.

According to the ABI, in June, analysis from international consultants EY said that the UK vehicle insurance market experienced its “worst performing year in a decade in 2022”. The report said that for every £1 vehicle insurers received in premiums, £1.10 was spent on claims and operating costs.

“Motor insurers continue to deliver when motorists and personal injury claimants need them the most,” said Laura Hughes, Manager General Insurance at ABI. “Despite facing sustained cost pressures, motor insurers remain totally focused on supporting customers when the worst happens, and doing all they can to ensure competitively priced motor insurance.”