Crashed car

Motor insurers paid out a total of £2 billion in claims in the second quarter of 2017, fuelled by rising repair bills and higher theft costs, according to ABI data published this month.

In the second quarter of this year ABI members paid out £2 billion in motor insurance claims, with the average claim at £2,839 up 6% on the same period last year. The bill for vehicle repairs, including third party claims and windscreen damage, was £1 billion, the highest quarterly figure on record, up 3% on the same quarter last year.

The average cost of repairing damaged vehicles of policyholders, at £1,770, has risen by 33% over the last four years since quarter 2, 2013. The increasing complexity and technology now incorporated into vehicles and, in recent times, a weaker pound that has led to more expensive spare parts, are behind rising repair bills.

Theft claims also rose with their cost at £68 million up 21% on the same quarter last year. The number of claims, at nearly 13,000, is at its highest quarterly level since early 2013. The rise has partly been fuelled by the increasing use of high-tech devices enabling car thieves to steal cars without forcible entry.

Rob Cummings, Head of Motor and Liability at the ABI said: “Cost pressures continue to dominate the motor insurance market. Rising repair bills reflect increasing vehicle technology and complexity, but also the availability and cost of some spare parts sourced overseas. We need the best possible Brexit deal to help ensure availability of vehicle parts.

“These figures further highlight why the Government needs to act to help relieve unnecessary industry costs. The recent Government announcement to introduce legislation to reform the Discount Rate should help. It is also important that the Government effectively implements their whiplash reforms, and that there are no further hikes in Insurance Premium Tax.”