Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the effectiveness of regulation of motor insurers in the context of increases in premiums.

Answered by Emma Reynolds - Economic Secretary (HM Treasury)

Insurers make commercial decisions about pricing and the terms of cover they offer based on their assessment on the likelihood of a claim being made and the cost of those claims. Motor insurance premiums have been affected by specific economic factors that increased the costs of claims, such as the rising cost of replacement car parts

However, the Government is determined that insurers treat customers fairly and firms are required to do so under Financial Conduct Authority (FCA) rules. The FCA requires firms to ensure their products offer fair value (i.e. if the price a consumer pays for a product or service is reasonable compared to the overall benefits they can expect to receive).

On 16 October, the FCA announced a package of work in the insurance market amid concerns about rising prices. This includes a market study on premium finance – a form of credit that allows insurance customers to spread the upfront annual cost of their premium. On the same day, the Government launched a cross-Government taskforce on motor insurance. This Taskforce has a strategic remit to set the direction for UK Government policy, identifying short- and long-term actions for departments that may contribute to stabilising or reducing premiums, while maintaining appropriate levels of cover.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has made an assessment of the recent increase in motor insurance premiums.

Answered by Emma Reynolds - Economic Secretary (HM Treasury)

Insurers make commercial decisions about pricing and the terms of cover they offer based on their assessment on the likelihood of a claim being made and the cost of those claims. Motor insurance premiums have been affected by specific economic factors that increased the costs of claims, such as the rising cost of replacement car parts

However, the Government is determined that insurers treat customers fairly and firms are required to do so under Financial Conduct Authority (FCA) rules. The FCA requires firms to ensure their products offer fair value (i.e. if the price a consumer pays for a product or service is reasonable compared to the overall benefits they can expect to receive).

On 16 October, the FCA announced a package of work in the insurance market amid concerns about rising prices. This includes a market study on premium finance – a form of credit that allows insurance customers to spread the upfront annual cost of their premium. On the same day, the Government launched a cross-Government taskforce on motor insurance. This Taskforce has a strategic remit to set the direction for UK Government policy, identifying short- and long-term actions for departments that may contribute to stabilising or reducing premiums, while maintaining appropriate levels of cover.

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