Government taskforce to drive down cost of car insurance

The Government has created a taskforce to tackle the rising cost of car insurance as figures suggest a 21% hike in premiums over the past two years.

Meeting today (Wednesday, October 16) for the first time, the Motor Insurance Taskforce is being led by the transport secretary, Louise Haigh, and the economic secretary, Tulip Siddiq.

It will also involve industry groups and consumer champions such as the Association of British Insurers, Citizens Advice, Which? and Compare the Market, as well as insurance regulators.

Factors driving up the cost of insurance include inflation, rising car thefts and potholes.

Haigh 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.”

She added: “Our new expert taskforce is a major step forward in delivering a fair deal for drivers. It will give this issue the attention it deserves – rooting out the factors driving up costs for industry, and ensuring drivers are able to hit the road.”

The taskforce will bring together expertise from regulators, motoring groups, insurers, and consumer groups to find solutions for the high cost of insurance, addressing contributing factors to high costs generally.

The expert group will identify the causes of rising costs, assess whether consumers are receiving fair value for money, and look at the impact on the groups hit the hardest, using advice from the key regulators the Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA).

Colm Holmes, CEO of Allianz UK, and chair of the ABI sub-board committee on motor insurance affordability, said: “The cost of insurance has become a headache for many motorists who are struggling with wider cost of living pressures.

“The problem is compounded by a range of factors, including an increase in the number of accidents in recent years, the cost of repair rising at above the inflation rate, the prevalence of insurance fraud and motor theft, as well as the poor disrepair of our roads.”

He added: “The taskforce is a clear step forward as we can make more headway on this complex issue if the industry, regulators, and government try and tackle it together.

“Though premiums are showing signs of falling, we want to ensure that direction of travel continues, and so we look forward to helping the taskforce explore all the challenges.”

IAM RoadSmart also welcomed the taskforce and hopes it will have a positive impact on bringing down high motor insurance premiums.

Director of policy and standards, Nicholas Lyes, said: “We remain concerned that recent increases in premiums have had a disproportionate impact on younger drivers.

“Our research shows that between 2022 and 2023, the number of drivers aged 17-20 with insurance offences added to their licence increased by a quarter, meaning that eyewatering premiums may be tempting some to avoid taking it out in the first place.

“We support measures that encourage incentives such as lower premiums for those younger drivers taking additional training and this option should be considered as part of the solution.”

For more from Fleet News on controlling your fleet insurance costs and what you need to know, click here.