We know it can be frustrating when car insurance prices go up. Sometimes they go down and that can be equally confusing.
So, to help explain, let’s look at where the money goes, in terms of paying for claims, our operating costs and the services we provide.
Claims
How much we pay out in claims, looking after our customers when they need us most.
Insurance premium tax
12% of every premium goes towards the government’s Insurance Premium Tax (IPT). It’s like VAT for insurance.
Running our business
Our operating costs, our people and the systems we use to help us provide the best services possible.
Profit
Businesses need to make a profit in order to survive. It may be surprising to see how this compares to the amount spent settling claims.
Reinsurance and Industry funds
Even insurers need insurance. To make sure you’re still protected if something goes wrong for them, insurers all pay into a number of industry compensation schemes.
Based on 2023 Allianz Car Insurance data
![How is my car insurance spent](/insurance/car-insurance/how-is-my-car-insurance-premium-calculated/how-is-my-car-insurance-spent/_jcr_content/root/parsys/wrapper_222734459/wrapper/wrapper/wrapper/image.img.82.3360.png/1712308566153/price-calculated-graphic.png)