The Motor Finance Taskforce was a missed opportunity

The Government published the final report of its motor insurance taskforce yesterday. The initiative was kicked off by former Transport Secretary Louise Haigh last year - following through on a Labour party manifesto commitment to tackle the cost of motor insurance.

Predictably, the final report is damp squib. Motor premiums have fallen over the last year - mostly as a result of a significant change in the discount rate at the start of 2025. This means personal injury payouts are lower - and those savings have been handed back to consumers. But the underlying problems that pushed prices up two years ago have not gone away. And the broader social issue that motor insurance is becoming unaffordable for many lower income households still remains.

The report does acknowledge the first of these two points. And there are weak commitments to work with industry to improve claims efficiency and reduce the cost of car repairs. And yes, there is the inevitable commitment to fill in more potholes. Interestingly, there's no mention of the fact that the 20mph urban speed limits in Wales have been a massive success - driving premiums down faster there than anywhere else. It works, but people hate it. So it didn't get a mention. However, we will see a new Government road safety strategy next year - which will surely have to acknowledge this.

Hard to believe this is a Labour government publication

On the broader affordability issue, the paper couldn't have ended up further away from where Louise Haigh would have wanted it to. The paper lists a range of remedies to improve pricing fairness and transparency (which look like they were taken from the executive summary of our recent Insurance pricing report) - and then says that these would distort the market so they are a non-starter.

Social tariffs and progressive changes to IPT are also summarily dismissed. For poverty premium campaigners - there is nothing in here. It is surprising to see two Labour ministers fronting this report - as there is nothing in here that remotely pertains to Labour's values.

There was at least an acknowledgment that telematics could play a greater role in improving road safety and reducing premiums. But this was simply referred to the FCA as something to take a look at.

The ethnicity premium (almost) doesn't exist

Back at FCA HQ, we also saw the results of some new economic analysis looking at whether the ethnicity premium exists in motor insurance. Invariably, it concludes that while minority ethnicities pay higher car insurance costs, this is almost all explained by higher claims costs.

I don't know many people in the industry (perhaps with the exception of Citizens Advice) that really believed the conspiracy that insurers were actively discriminating against minorities. The analysis was always going to show that the prices correlated to claims costs - as these groups are more likely to live in poorer urban areas. However, the analysis side steps the bigger issue that insurers are penalising lower income customers not just for their risk, but for their propensity to claim. That is a bigger social issue - and again, it is incredibly disappointing that this Government does not want to acknowledge it, let alone address it.

The analysis does, however, reveal that there is a small amount of ethnicity premium can't be explained by claims costs. In some areas it is trivial. But in Luton, it's getting on for 5%. Alas it is impossible to get to the bottom of what is driving this without looking at insurers' pricing models in detail. I've spoken to several people in the industry who acknowledge this small premium - but are unable to explain it even in their own models. I don't for a second believe it is active discrimination. It will be driven by data. But it may be yet another social unfairness that the industry is imposing on customers.

So the motor insurance taskforce goes down as another massive missed opportunity. Next week, we will get the FCA's response to the Which? super-complaint on home and travel insurance - perhaps our last hope for any meaningful change in the sector. I know the FCA understands the problems in the market - but will it have the courage to take the appropriate action given the current political direction it is receiving from Government? Let's see.