The Transport Secretary needs to put an end to the great car insurance rip-off - Andrew Vine

If there’s a bigger rip-off in the lives of everyone who drives a car than motor insurance, I don’t know what it is. We’re being fleeced mercilessly by insurance companies who have us in a trap which they are exploiting for all they’re worth to enrich themselves.

Unlike insurance for our homes or belongings, we’ve no choice about insuring vehicles because it’s a legal requirement.

The consequence is that insurers are able to charge what they like, and advice to shop around for a lower price is no real answer because all the companies are playing the same cynical game.

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Go onto any price-comparison website for proof of that. The difference in prices is at best marginal, usually a matter of a few pounds.

Vehicles travelling along the M1 motorway. PIC: Rui Vieira/PA WireVehicles travelling along the M1 motorway. PIC: Rui Vieira/PA Wire
Vehicles travelling along the M1 motorway. PIC: Rui Vieira/PA Wire

This is one of the worst consumer outrages of our age, perpetrated on drivers for the past two years since prices started shooting up in 2022.

Despite having no claims for more than a decade, not having moved to an area deemed to be at higher risk of car theft, and changing insurers in search of a lower price, my premiums have risen by about 25 per cent in each of the past two years.

Every driver I know has a similar story to tell. If food prices had risen at such a rate over that period, there would be a national outcry and demands for the government to get a grip, and so there should be about car insurance costs.

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My history of very infrequent claims will be mirrored by the vast majority of drivers across Yorkshire. Most of us, thankfully, drive without being involved in accidents except very occasionally.

That means most of the premiums paid to insurers amount to money for nothing because they are not having to pay out to the bulk of their customers.

Yet according to the Association of British Insurers, the average premium in the three months to June was £622, an increase of 21 per cent on the same period a year earlier.

If anybody needed further proof of the price-gouging going on in the name of us complying with the law, they need only compare insurance costs for vehicles with those for our homes.

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In the same period my car insurance has shot up, the cost of keeping my home and belongings covered has only risen in line with inflation, which is fair enough.

But fairness appears to be a concept alien to the motor insurance industry. There was further evidence of that last week when the Financial Conduct Authority announced it was scrutinising payment plans being operated by insurers because it was concerned that customers are being ripped off.

Forgive all of us who drive for not being in the least bit surprised that in addition to exorbitant premiums, these companies have come up with an ingenious additional method of screwing even more out of the poor old motorist.

The con is to impose interest rates of between 20 and 30 per cent on customers who pay their premiums in instalments rather than in a lump sum.

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The consumer champion Which? rightly condemned this as a “tax on being poor” because it is motorists who cannot afford a single payment who are opting to pay by instalments.

The scale of what is being made from such eye-watering interest rates is breathtaking, because the FCA estimates that 20m people are having to use these payment plans.

What a grubby and disreputable way to treat people who are worried about their finances and for whom having a car is essential to get to work, take children to school, or attend to other pressing family needs.

This is naked profiteering, and there cannot be many among us who believe the insurers’ insistence that premiums have risen because of higher costs of handling claims, increased costs for spare parts and supply-chain problems that have caused repair times to grow longer.

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Let’s not forget that the insurance industry has form for sharp practice when it comes to hiking prices. Until a crackdown a few years ago, it was standard for them to relentlessly increase premiums for existing customers while luring new ones in with much lower prices for identical policies.

The government has announced a taskforce to look into the spiralling cost of motor insurance, and will hear from the likes of Which? and Citizens Advice alongside the industry.

Transport Secretary Louise Haigh – MP for Sheffield Heeley – should ensure that the taskforce asks some very tough questions of insurers who provide what is an essential service.

She needs to be on consumers’ side in this issue, especially those millions of poorer motorists who are being stung by instalment schemes charging interest rates that would make a backstreet money-lender blush.

The car insurance rip-off must be stamped on.

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