Insurance bodies will meet with ministers and the Transport Secretary later today to crack down on the “spiralling” costs of car insurance which has seen some motorists pay thousands of pounds a year.
Transport Secretary Louise Haigh and Economic Secretary to the Treasury Tulip Siddiq will announce that a new motor insurance taskforce will be created.
They will be charged with examining expensive car insurance prices, as well as looking into those who are most impacted by factors like age and ethnicity.
It is expected that the Association of British Insurers, the British Insurance Brokers’ Association, Citizens Advice, Which? and Compare the Market will be in attendance at the meeting.
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Louise Haigh has called on insurers to make urgent progress into expensive costs
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The Department for Transport has outlined that certain factors are forcing insurance premiums higher, including the rate of inflation and the car theft epidemic.
According to the latest data from Confused.com, the average price for car insurance cover is £861 per year. This is a slight drop compared to the £995 average cost seen at the end of 2023.
Transport Secretary Louise Haigh, who represents Sheffield Heeley, said the new taskforce would be a “major step forward in delivering a fair deal for drivers”.
She added: “Car insurance is an essential, not a luxury. It is vital to accessing economic opportunities, and this Government is committed to getting costs under control.
“That’s why we’re taking direct action to bring insurance companies and regulators round the table to discuss how we can crack down on spiralling costs.”
Labour’s election manifesto pledged to further support drivers by tackling the soaring cost of car insurance as part of its automotive sector plan.
It reported that car insurance prices have soared by over £200 in just two years, with an estimated one million people cancelling their insurance due to the cost of living crisis in 2022.
Labour said it would call on the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA) to launch urgent investigations into the high prices.
The pledge to tackle soaring car insurance costs included an investigation to see whether postcode pricing practices were unfairly targeting ethnic minorities and those on lower incomes.
Hannah Gurga, director general of the ABI, said the organisation was aware of how tough the last few years had been with the rising cost of car insurance.
She clarified that the ABI was “working hard” with members to specifically tackle the cost of claims that impact on premiums.
Gurga added: “While average premiums have fallen recently, there should be no loss of momentum on tackling costs and we look forward to bringing ideas to the taskforce table, building on the 10-point roadmap we released earlier this year.”
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Car insurance rates have soared since the pandemic
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Some drivers, notably those in major cities and under the age of 21, are still dealing with the most expensive costs for their car insurance.
On average, motorists in Inner London are paying £1,357, while 17-year-olds could be priced off the road with staggering average costs of £2,727.
