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<\/div>\nThe rising cost of car insurance has triggered a barrage of complaints in the cost of living crisis, Britain\u2019s financial watchdog told lawmakers on Wednesday, as the sector insisted that prices remain at 2018 levels in real terms.<\/p>\n
Matt Brewis, director of insurance at the Financial Conduct Authority (FCA), said he has heard \u201cheartrending stories\u201d from people trying to make ends meet as costs such as insurance rise.<\/p>\n
\u201cIt is clear there is a significant increase in pricing of motor and home insurance over the last two to three years,\u201d Brewis told parliament\u2019s Treasury Committee hearing on the insurance market.<\/p>\n
\u201cMotor insurance is the one where we are seeing the greatest level of complaints,\u201d Brewis said, adding that price increases were due to supply chain issues, complexity of vehicles, and the number of claims.<\/p>\n
The sector had also not done a good job in forecasting inflation and its impact, prompting it to recoup significant underwriting losses and price in future inflation, Brewis said.<\/p>\n
\u201cIt is a very competitive sector,\u201d Brewis said, adding there are over 48 active insurers.<\/p>\n
The committee said inflation in car insurance, which all motorists have to buy, hit a high of 50% in the past year, citing Britain\u2019s Office for National Statistics.<\/p>\n
The publication Which? on Wednesday<\/a> said some people who can only afford car insurance through monthly installments are being charged \u201ceye-watering\u201d amounts of interest of up to 30%, on an annualized basis.<\/p>\n David Mendes da Costa, principal policy manager at Citizens Advice, said it was difficult for consumers to disentangle what was pushing premiums higher, with people of color being charged more for car insurance than white people, largely due to where they lived, da Costa told the committee.<\/p>\n Charlotte Clark, director of regulation at the Association of British Insurers, said premiums were catching up with costs such as repairs and inflation, while profits \u201care not there.\u201d<\/p>\n Motor insurance prices fell 20% during the COVID-19 pandemic as fewer people drove, and the real price of insurance is now about where it was in 2018, Clark said, adding that collecting payments monthly was more expensive for insurers.<\/p>\n \u201cIt\u2019s an incredibly competitive market,\u201d said Colm Holmes, CEO of German insurer Allianz in Britain.<\/p>\n Allianz does not collect data on customer ethnicity, and a customer\u2019s postcode and its data on accidents and probability of criminality, is the key risk and pricing determinant, Holmes said.<\/p>\n (Reporting by Huw Jones; editing by Jonathan Oatis)<\/p>\n Topics<\/span> Carriers<\/a> Auto<\/a> Uk<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n