Shares in insurance companies, including Direct Line Insurance Group PLC (LSE:DLG) and Legal & General Group PLC (LSE:LGEN), were in the red after the industry set out plans to reduce motor insurance premiums after they raised them 25% in 2023.
The Association of British Insurers has published a 10-point plan as it kicked off its annual conference, encompassing actions by industry as well as calls on the government and regulators.
Insurers say the price rises have been driven by inflation in the cost of claims, with estimates from EY that in 2022 for every £1 paid in premiums, insurers incurred £1.11 in claims and expenses, rising to £1.14 in 2023.
Discussions are being held about premium finance with the Financial Conduct Authority, with the regulator having already launched an investigation into this corner of the sector, and the ABI said the industry is also considering how it can work with finance houses and brokers that are not members.
Suggested support from the government and regulators included introducing graduated driving licenses, a "rethink" of the Personal Injury Discount Rate as the costs of large, severe injury compensation filter back to premiums, making assisted safety features mandatory in new cars, and cutting the insurance premium tax, which adds £67 to the average policy.
Mervyn Skeet, the ABI's director of general insurance policy, said: “We know that insurance costs are putting strain on household finances, so we’ve been working hard to find solutions. Some of these actions we can do quickly, others will require time or assistance from the regulator or UK governments.
“Regardless, we will continue to do what we can under our new strategy to help consumers access the products that are integral to financial wellbeing and play a key role in the nation’s financial resilience.”
The ABI said it will commission research into the "feasibility and impact" of social policies focused on helping low-income households manage their insurance costs.
Members of the trade body were also said to be "committing to better explain how insurance premiums are calculated and the steps customers can take to reduce costs", by providing detailed explanations at the time of renewal and during the purchasing process.
Another possible option not mentioned was insurers just cutting their profit margins.