The average price paid for comprehensive motor insurance rose in Q4 2019 to its third highest quarterly level since 2012. This is according to the latest Motor Insurance Premium Tracker published by the Association of British Insurers.

The average premium paid on Q4 2019 was £484, a £15 and 3% rise on the previous quarter. Separately, the average motor premium paid in 2019 was £471, the third highest annual figure on record.

The ABI listed factors contributing to mounting cost pressures for insurers and motorists in 2019.

For instance, the government’s changes in July to the Ogden rate which especially have had an impact of premiums for higher risks, such as young drivers, according to the association.

The ABI also mentioned the rising repair costs, reflecting ever more sophisticated vehicle design and technology which in most cases are more expensive to repair when damaged. In the H1 2019, the repair bill for insurers reached £2.3bn, rising by 11% on the same period in 2018.

A third element listed was the cost of vehicle theft in H1 2019, up by 18% on H1 2018. This reflected Home Office figures recording a rise in vehicle thefts over the last five years.

The association also referred to the Insurance Premium Tax, which has doubled from 6% to 12% since 2015. This currently adds an extra £50 to the average annual motor premium, stated the ABI. It reiterated its call for a cut in the IPT rate to the government last week.

Assistant-director of the ABI and head of general insurance policy, Mark Shepherd said: “Motor insurance may remain very competitive, but motorists still face being on the receiving end of the mounting cost pressures that insurers are facing.

“One obvious and much needed way to help motorists is for the government to reduce the IPT burden in its March budget,” he added. “This tax penalises drivers for simply complying with the law and having motor insurance, hitting hardest those facing higher premiums, such as younger drivers.”

Managing director, underwriting and technical services at AXA, David Williams commented: “Car insurers do their best to keep costs down, but other factors affect pricing, including increased vehicle thefts, repair bills, and the discount rate used to calculate personal injury compensation.

“Since the IPT adds on average £50 to motor premiums, we urge the government to cut IPT to keep car insurance affordable,” he added. “Making sure all drivers have insurance is the best way to protect all road users, and an IPT reduction would encourage those good behaviours.”

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