Insurance bodies will meet with ministers and consumer groups on Wednesday as the Government has committed to crack down on “spiralling” costs of motor insurance.
Transport Secretary Louise Haigh and Economic Secretary to the Treasury Tulip Siddiq will also launch a new motor insurance taskforce, charged with examining the cost of cover and those that are disproportionately affected by factors such as age or ethnicity.
The Association of British Insurers (ABI) and the British Insurance Brokers’ Association will be among those in attendance at the meeting at the Department for Transport’s Westminster headquarters on Wednesday afternoon, as well as Citizens Advice, consumer group Which? and comparison service Compare the Market.
Labour’s general election manifesto pledged to “support drivers by tackling the soaring cost of car insurance”.
The taskforce, also launched on Wednesday, will be co-chaired by Ms Haigh and Ms Siddiq. The rest of the membership will be made up by the Home Office, the Ministry of Justice, the Department for Business and Trade, the Department for Education, the Financial Conduct Authority (FCA) and the Competition and Markets Authority.
Ms Haigh described the taskforce as a “major step forward in delivering a fair deal for drivers”.
She said: “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.
“The rising cost of cover affects all drivers, but some groups have been hit harder than others. No matter your background or circumstance, this Government is determined to ensure drivers get a fair deal.”
Hannah Gurga, ABI director general, said: “We’re aware just how tough the last couple of years have been for motorists and we have been working hard with our members to tackle the cost of claims that impact on premiums.
“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.”
In June, figures from Compare the Market suggested that the typical insurance premium had risen by £132 over the previous 12 months. There were spikes in premiums for those aged under 25 or over 80, according to the website’s research.
The FCA said it has launched a review known as a competition market study to consider whether people who pay for motor and home insurance in instalments are receiving fair and competitive deals.
The average yearly increase in the total cost of premiums for paying in this way rather than upfront is 20-30%, according to the FCA, although some providers charge no additional fees.
FCA director of competition Graeme Reynolds said: “People rely on premium finance to spread their insurance costs by paying in smaller monthly payments.
“We want to ensure that competition works well and make it easier for consumers to find the best deals.”
