UK motor policy disinflation continues in Feb., still at 33.6% y/y

UK motor insurance policy inflation continued to ease sharply through the early months of 2024, coming down by 2.8 percentage points (pps) in February to following a hardier 4.5 points in January, albeit still at a hearty 33.6% even after seven months of disinflation. 

That disinflationary trend has now taken the headline annual inflation reading down by nearly 16 points from the July 2023 peak at just under the 50% mark, data from the UK’s Office for National Statistics showed. 

Auto claims cost inflation remains comparatively muted, with repair cost inflation still bouncing through the upper single-digits, spare parts holding a mid-single digit range and used cars still in ever-deeper deflation to take the edge off 2021-2 price spikes. 

Policy price inflation has not only past current claims cost inflation readings, but has long since distanced claims cost shortfalls from the pandemic era.

Marked against pre-pandemic levels from end-2019, average automotive insurance premiums have risen 64.1%, versus 29.6% growth in hospital care costs, 25.0% growth in repair costs, 21.1% growth in used vehicle prices and 19.9% growth for spare parts.

Against an even blend of those four cost categories, premium growth from pre-pandemic levels is now over 40 percentage points ahead of claims inflation. 

The UK’s broader Consumer Prices Index (CPI) rose by 3.4% in the 12 months to February 2024, down from 4.0% in January. Food and hospitality were said to have exerted downward pressure, partially offset by upward contributions from housing and household services, and 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.