The new Private Motor Insurance Market Report has been published by Lake Market Research, which compared DfT data on the number of private cars in use and insurance industry data on the number of private cars insured.

The research found that the proportion of private cars insured peaked at almost 100% in 2006. With the financial crisis and the onset of recession, the proportion of private cars insured fell to just 91% in 2012. This is equivalent to 2.5 million cars currently uninsured in the UK.

The research also found consumer suspicions of profiteering, widespread mistrust of price comparison websites and the industry’s “reluctance or inability to engage with consumers in a meaningful way”.

The research follows the December 2013 publication of the Competition Commission’s provisional findings on the £11bn private motor insurance market. It found that ‘it is not working well for motorists’ and is ‘looking at ways to reduce the cost of premiums’.

Lake Market Research managing director Julie Hodgson commented: ‘Fundamentally there is a lack of consumer confidence in the motor insurance market due to a lack of transparency. The increase in the number of uninsured cars is a real worry. Are people being priced out of using their cars or are there many more people driving around without insurance?

‘Although 50% of motorists think fraudulent claims are the main cause of higher premiums, 6.9 million of them changed insurer last year. The Lake research found that very few changed due to a poor claims experience (1%) or poor customer service (2%). It is all about price. Motorists think they’re being ripped off.

‘Between 2010 and 2012, total net written premiums (insurers’ income) rose by 2.7% and net claims costs (insurers’ outgoings) fell by 16%. However, this was offset by a 38% increase in commission and expenses payments. Despite many insurers reporting underwriting losses, it is clear that motorists haven’t bought the industry’s “we make losses on motor insurance” message.’

Hodgson added: ‘Insurers are in danger of making the same mistake with telematics. Lake’s research found that, while 12% of motorists are interested in telematics-based policies, few realise the costs frequently attached to using the car at peak times. If telematics-based policies result in significantly higher premiums, or an enforced reduction in car use, then calls for motor insurers to be regulated by legislation will grow.’

The Private Motor Insurance Market Report is available at www.lake-research.com