UK auto policy inflation at still-hearty 28% in March, well past claims

UK motor insurance policy inflation continued to ease sharply in March 2024, coming down by another 5.5 points to a still-hearty 28.1% in its eighth month of disinflation. 

That disinflationary trend has now taken the headline annual inflation reading down more than 21 points from the July 2023 peak of just under 50%, data from the UK’s Office for National Statistics showed.

Auto claims cost inflation remains comparatively muted, with all component elements in single digit inflation - or even a case of deflation - since mid-2022. 

Repair cost inflation remains the biggest wildcard, bouncing through upper single-digit readings, including March’s largest upward move of 1.5 points to a 9.3% reading. 

Elsewhere, spare parts inflation at 4.6% in March remains in milder territory, down from the prior seven readings, but still inside the larger post-pandemic range. Used cars remain steeped in annual deflation. Hospital service inflation holds a relatively tight range near 7%. 

Marked against pre-pandemic levels from end-2019, average automotive insurance premiums have risen 63.5%, versus 29.7% growth in hospital care costs, 26.0% growth in repair costs, 21.4% growth in used vehicle prices and 19.6% growth for spare parts.

Against an even blend of those four cost categories, premium growth from pre-pandemic levels is now nearly 40 percentage points ahead of claims inflation after having finally caught up to claims in February 2023. 

The UK’s broader Consumer Prices Index (CPI) rose by 3.2% in the 12 months to February 2024, down from 3.4% in February. Food was said to have exerted downward pressure, partially offset by upward contributions from motor fuels.

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