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Aviva’s chief executive has said that Labour’s promised crackdown on rising motor insurance prices would be using a “sledgehammer to crack a nut” and was based on flawed logic.
Speaking at the FT’s Global Insurance Summit in London on Thursday, Amanda Blanc, who leads one of the UK’s biggest motor insurers, denied there was a problem with pricing.
Premiums hit an all-time high last year, according to one price comparison site, as insurers rushed to catch up with a surge in their claims costs that had left the sector with its worst underwriting performance in a decade.
Blanc said the motor insurance market was highly competitive, and price rises were needed given the surge in costs for things such as second-hand cars. Prices have also been recovering from a big dip during the pandemic due to lockdown effects. Saying there was an issue with the market was “fundamentally flawed”, she added.
“You have to say this market is competitive,” she added. “[If there are] actors in this market who are maybe taking advantage . . . deal with that. You do not need a sledgehammer to crack a nut.”
The Labour party has said that if elected it would focus on soaring car insurance costs. “We will urgently call in the regulators to crack down on any unfair practices and to come clean on the causes of soaring costs for consumers,” Labour’s shadow transport secretary Louise Haigh told the Mirror newspaper last week.
Speaking earlier at the FT event, Baroness Nicky Morgan, chair of the Association of British Insurers, said she expected any incoming administration to focus on the consumer.
“There are many reasons for [prices] rising,” she said, as she urged both main parties to consider the tax charged on insurance premiums. The ABI unveiled a 10-point plan in February for the sector to tackle rising motor insurance costs.
ABI data, based on policies taken out by customers, showed that premiums rose 1 per cent in the first quarter of the year, compared with the previous few months, showing a slowing pace of growth.
But there has been growing focus on the higher premiums paid by younger drivers, those in inner-city postcodes and from low-income households — as well as those who can only afford to pay monthly.
The UK’s financial regulator has been looking at premium finance, which insurers offer to allow customers to pay monthly, but it and insurers have warned that there could be unintended consequences from any intervention.