Insurance bodies meet with ministers to tackle the 'spiralling' costs of motor cover

Insurance bodies are set to meet with ministers and consumer groups this Wednesday, as the Government pledges to tackle the "spiralling" costs of motor insurance.

Transport Secretary Louise Haigh and Economic Secretary to the Treasury Tulip Siddiq will also unveil a new motor insurance taskforce, tasked with scrutinising the cost of cover and identifying those disproportionately affected by factors such as age or ethnicity. The Association of British Insurers (ABI) and the British Brokers’ Association will be among those present at the meeting at the Department for Transport’s Westminster headquarters on Wednesday afternoon, alongside Citizens Advice, consumer group Which? and comparison service Compare the Market.

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Labour's manifesto promised to "support drivers by tackling the soaring cost of car insurance". According to the DfT, inflation and car thefts are among the factors driving up the cost of car insurance. The taskforce, also launched on Wednesday, will be co-chaired by Ms Haigh and Ms Siddiq.

Other members will include representatives from 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 hailed 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."

ABI director general Hannah Gurga 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."

Earlier figures from Compare the Market indicated that the typical insurance premium had increased by £132 over the past 12 months, with notable spikes for drivers aged under 25 or over 80, based on the website’s analysis. Additionally, the FCA has announced the launch of a review, known as a competition market study, to examine if customers who pay for motor and home insurance in instalments are being offered deals that are both fair and competitive.

Typically, paying in instalments adds 20-30% to the overall premium cost each year, the FCA notes, although some providers do not charge extra 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."