Skip advert
Advertisement

Food or car insurance? Tough choices for low income households as costs spiral

Citizens Advice has told parliament’s Treasury Committee that people of colour pay, on average, £250 more for car insurance

Car insurance

Lower income households in the UK are having to choose between buying food or paying the ever-spiralling cost of car insurance, parliament was told yesterday.

Giving evidence to the Treasury Select Committee inquiry into the rising costs, competitiveness and conduct of the insurance industry, the principal policy manager for Citizens Advice (CA) David Mendes de Costa told MPs:

Advertisement - Article continues below

“The people that are coming to us are having to make impossible choices of whether to pay for their car insurance or put food on the table – we’ve had several clients come to us that are having to make food bank referrals because of the rising cost of insurance.” 

According to Mendes de Costa, half of CA advisers had seen people having to cancel their insurance policies due to rising premiums, up from just 5 per cent in 2002. 

He also highlighted that those on lower incomes tend to be charged more for car insurance, and the same goes for people of colour who, according to CA, are charged £250 more on average than white people for their premiums. 

Mendes de Costa added that this is not a case of direct discrimination, given it’s typically postcodes and other similar factors that are used to determine risk. However, he reaffirmed that “there is no clarity as to what’s driving [higher prices] – what risk factors are applied to postcodes, or what cost factors”.

Skip advert
Advertisement
Skip advert
Advertisement - Article continues below

“It’s for the FCA to ask insurers to collect that data – and until they do that, we can’t move the conversation forward.”

Last week the UK car insurance industry was blasted as “greedy”, with data showing that premium rises in mainland Europe have been significantly less than here in the UK. Industry trade body the Association of British Insurers blames this on the increasing costs of repairs and maintenance, claiming that in the final quarter of 2023, £1.11 was paid out on claims for every £1 taken in premiums.

Office of National Statistics data shows that insurance prices across all sectors have, on average, risen by 17 per cent in the past year, with Citizens Advice (CA) joining a growling list of voices calling for action from the Financial Conduct Authority.

Despite the many calls for a response to rising prices, the FCA said last month that it would not conduct a full market inquiry, instead promising only to “assess the state of the market” this year. In a previous statement, the regulator said: “While we do not set or control insurance prices, we are monitoring the motor insurance market closely to ensure customers are receiving fair value.”

Have you seen an increase in your car insurance? Let us know in the comments...

Skip advert
Advertisement
Consumer reporter

Tom is Auto Express' Consumer reporter, meaning he spends his time investigating the stories that matter to all motorists - enthusiasts or otherwise. An ex-BBC journalist and Multimedia Journalism graduate, Tom previously wrote for partner sites Carbuyer and DrivingElectric and you may also spot him throwing away his dignity by filming videos for the Auto Express social media channels.

Skip advert
Advertisement

Recommended

Dieselgate is back? Thousands of cars could be recalled as scandal returns
Emissions tests questioned

Dieselgate is back? Thousands of cars could be recalled as scandal returns

The DfT is currently investigating as many as 47 models across several brands that are suspected to use diesel defeat devices
News
14 Nov 2024
Car finance scandal firms given more time to process complaints by FCA
Finance contract, car key and calculator on desk

Car finance scandal firms given more time to process complaints by FCA

As much as £16 billion could be up for grabs for car finance customers affected by discretionary commission arrangements
News
14 Nov 2024
MOT failure rate is worse for vans than cars
MOT

MOT failure rate is worse for vans than cars

More than a third of light commercials failed their first MoT last year, new figures show
News
12 Nov 2024
Paris mayor says ‘non’ to through traffic with plans to fine drivers
Renault Zoe being driven in Paris

Paris mayor says ‘non’ to through traffic with plans to fine drivers

Drivers entering Paris city centre will have to prove residency or a valid destination to avoid a fine
News
5 Nov 2024

Most Popular

Hot Land Rover Defender Octa in high demand with close to 3,000 orders at £150,000 each
Land Rover Defender Octa - front action

Hot Land Rover Defender Octa in high demand with close to 3,000 orders at £150,000 each

Buyers aren’t being deterred by the hefty asking price for the most powerful Defender yet, with 2,900 already signing up worldwide
News
12 Nov 2024
Mazda CX-60 is now more comfortable thanks to 2025 updates
Mazda CX-60 - front 3/4 static

Mazda CX-60 is now more comfortable thanks to 2025 updates

Mazda’s SUV has picked up some worthy trim and technical updates
News
13 Nov 2024
Car Deal of the Day: premium Nissan Ariya has a 319-mile range for £278 per month
Nissan Ariya - main image

Car Deal of the Day: premium Nissan Ariya has a 319-mile range for £278 per month

The Airya marked a step-change for Nissan and this ‘Sky Pack’ model is our Car Deal of the Day for 12 November
News
12 Nov 2024