Although we’re beginning to see a drop in the rate of inflation, there are still challenges on the road ahead.
The Financial Conduct Authority (FCA) is predicting that the cost of car insurance will continue to rise in 2024.1
The rise in cost is due to a number of factors, not least of all the increase in costs of car repairs, paint, labour and parts, as well as the impact of increased energy prices. The value of claims pay-outs has significantly increased year on year due to the rising market price of used cars, which also has an effect on premiums.
Young drivers and insurance fraud
The biggest impact from motor insurance increases is hitting our young drivers, with premiums reaching nearly £3,000 for some, according to recent reports.2
And as a result, there is a greater risk of insurance fraud being committed by way of “fronting”.
What is “fronting”?
Fronting is where an individual is added to an insurance policy as a named driver rather than having their own policy, as this is often cheaper – particularly for younger drivers. If they are in fact the main driver, then this is known as fronting – and is fraudulent.
The Insurance Fraud Bureau (IFB) carried out a survey in 2023, revealing that a quarter of 18-24 year olds would think it OK to lie on an insurance application to save money – even though many may be aware that fronting is illegal.
If fronting is suspected and subsequently proven, the insurance cover could be invalidated – and there’s also the risk of a criminal prosecution.
But there is some good news
The Association of British Insurers (ABI) has published a roadmap to look at how motor insurance costs can be kept under control.
The roadmap outlines the initiatives that are already underway as well as plans that need collaboration with partners such as road safety organisations, government and the legal infrastructure.
1 www.bbc.co.uk/news/business-68126885
2 www.bbc.co.uk/news/business-67991154