Shares in insurance giants Admiral and Direct Line took a hit on Wednesday following the government's announcement of a new taskforce to address the "spiralling" cost of motor insurance.
The Department for Transport revealed that the taskforce, which includes regulators, motoring groups, insurers and consumer groups, aims to stabilise or even reduce motor insurance premiums while ensuring adequate levels of cover, as reported by .
Admiral, one of the º£½ÇÊÓƵ's largest motor insurers with coverage for 5.5m vehicles, was the poorest performing stock on Britain's blue-chip FTSE 100 index on Wednesday morning, seeing a drop of up to 4.2 per cent.
Direct Line also experienced a significant fall, dropping by as much as 3.6 per cent, making it one of the biggest losers in the mid-cap FTSE 250.
Transport secretary Louise Haigh stated: "Car insurance is an essential, not a luxury. It is vital to accessing economic opportunities and this government is committed to getting costs under control."
She added: "That's why we're taking direct action to bring insurance companies and regulators round the table to discuss how we can crack down on spiralling costs. The rising cost of cover affects all drivers, but some groups have been hit harder than others."
Haigh further explained that the initiative is aimed at "rooting out the factors driving up costs for industry and ensuring drivers are able to hit the road".
An analysis conducted by the Financial Conduct Authority (FCA) revealed that º£½ÇÊÓƵ motor insurance premiums have surged by an average of 21 per cent since June 2022, a rate significantly higher than similar economies such as Germany, France, Spain and Italy.
The º£½ÇÊÓƵ's insurance sector has attributed the increases to external influences like inflation, energy costs and the escalating expense of repairs.
Within this taskforce, the FCA plans to examine the effect of these rising insurance prices on various customer demographics, including younger and older drivers, as well as those from ethnic minority backgrounds or lower income brackets.
The government also announced participants for this initiative, which include trade body the Association of British Insurers, consumer groups Citizens Advice and Which?, and price comparison website Compare the Market.
