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Badenoch and Strathspey MP Drew Hendry (SNP) is demanding answers as to why UK drivers are being forced to pay higher insurance fees than their European counterparts.
In a letter to the Chief Secretary to the Treasury, Mr Hendry highlighted the particular impact rising car insurance costs is having on younger drivers and on drivers living across the Highlands and Islands ‘where car travel is not just a convenience but a necessity’.
Mr Hendry has challenged the Minister to explain what other factors have played a part in the rise as well as Brexit, and what the UK government plan on doing to address the pricing disparity.
It follows new analysis from the House Commons Library, commissioned by the SNP, which showed that since 2015, the UK has seen its car insurance increase by 102.3% on average – drastically higher than Sweden (+8.5%), Spain (+18.5%), France (+20.8%), Germany (+33.4%) and The Netherlands (+35.1%).
Meanwhile, Ireland (-21.1%), Belgium (-3.3%) and Denmark (-2.6%) have all seen insurance fees reduce in the same period.
Additional analysis from the Car Insurance Price Index also found that 18-year-olds have seen the biggest overall increase, with fees now averaging £3,145 – an annual increase of 70%.
Mr Hendry said: “It is vital that the Financial Conduct Authority conducts an enquiry into these price disparities to ensure fairness and transparency in the insurance market.”
In his letter to the UK’s Chief Secretary to the Treasury, Mr Hendry said: “I am writing to you following our recent exchange in Parliament, where I raised a concerning issue that affects many of our constituents: the rising costs of car insurance in the UK.
“As we have seen from recent data provided by the House of Commons library, insurance costs for UK drivers have doubled, whereas across the European Union, there has only been an 18% increase. Meanwhile, in Ireland, premiums are now a fifth cheaper than nine years ago.
“The Association of British Insurers has suggested that energy inflation, the increased cost of materials, and the expenses related to second-hand and courtesy cars are driving this increase. However, these factors do not fully account for the significant disparity between the UK and the rest of Europe.
“The pressing question remains: why are UK drivers subjected to such exorbitant costs compared to our European neighbours? Is this a consequence of Brexit, or are there other factors at play? Moreover, what actions is the UK Government taking to address this glaring pricing disparity?
“As I highlighted in our exchange in parliament, this issue adds a considerable financial burden to UK drivers, especially to our younger drivers.
“Many are already struggling with the impacts of soaring household expenses and the economic challenges post-Brexit.
“The additional financial strain of high car insurance premiums is exacerbating existing inequalities and contributing to a tougher economic environment for the younger generation.
“Therefore, I urge your department to take immediate action on this matter.
“It is vital that the Financial Conduct Authority conducts an enquiry into these price disparities to ensure fairness and transparency in the insurance market. Additionally, given the geographical challenges in regions like the Highlands, where car travel is not just a convenience but a necessity, it becomes even more crucial to address these issues promptly.
“Thank you in advance for your prompt response, and I hope to see swift and meaningful action taken to alleviate the financial burden on our constituents.”
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.