UK motor insurance costs up again in March, chasing all-time records

UK motor insurance policy inflation shot up in March to a 36.8% annual pace, now within striking distance of the all-time records set post financial crisis in 2010.

The 3.5 percentage points gain in the annual reading came on a 3.9% increase in prices from just the prior month, the UK's Office for National Statistics reported Wednesday.

Auto claims cost inflation, in contrast, has held single digit across all components for the fourth straight month. Parts and repairs costs fell month to month, new car costs are in disinflation and used cars remain in outright deflation for the sixth month when measured year on year against the post-pandemic price spike.

The catch up by premiums to costs may have begun late, but has beat the mark for many cost components.

Marked to end-2019 pre-pandemic, the 27.6% increase in policy costs is well ahead of 14.3% increase in parts and 15.3% increase in repair costs and lagging only the 32% gain that used car prices have seen over the period. Policy inflation had been deflationary through-end 2021, making the early contrast to cost gains quite alarming.

The UK's Consumer Prices Index (CPI) rose by 10.1% in the 12 months to February 2023, the seventh consecutive month of double digit annual readings, but down from a prior month uptick and the October 2022 peak.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.