UK car insurance costs likely to rise for another two years, report says
UK car insurance costs are set to rise for at least another two years, according to a new report.
The price for Brits to insure their cars is expected to rise 14 per cent in 2023 and will not flatten until 2025, according to a report by consultancy Oxbow Partners.
It comes as inflation has driven up the price of car repair costs, which has pushed big firms such as Aviva and Admiral to hike up cost of coverage.
But insurance groups have been criticised for the price rises amid the ongoing cost of living, with some arguing that it could deter customers from getting insured entirely.
Last week, insurance bosses from Admiral and Aviva argued that rising costs were not down to “profiteering” of any kind, but were instead down to “significant cost pressures.”
“The price of certain raw materials and energy costs are rising at rates well above general inflation, and these costs are becoming increasingly challenging to absorb,” the Association of British Insurers argued previously.
Paul De’Ath, head of market intelligence at Oxbow, told City PM that the price rise were “driven by high levels of claims inflation in 2022 which has continued into 2023,” but said this inflation could ease in the second half of this year.
He added it that customers were unlikely to cancel their insurance in response to rising costs and would simply opt for lower-coverage products instead.