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  • Car insurance premium split

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  • Car insurance premium split

    Where does your car insurance premium go?

    How the amount you pay is divided

    Trying to understand why your car insurance premium costs what it costs can be confusing – especially when it goes up and down. It’s important to us that you know where your money is going. So we’ve broken it down to make it as simple and clear as possible.

    Car insurance premium split


    Every business has to make a profit to exist – we're no different. But the profit we make is less excessive than you might think. The average car insurance premium delivers just 4% of profit. That profit means we can keep on protecting you and your car, year after year.


    On average, 64% of all premiums are paid out on claims. Paying claims is at the heart of what we do – that’s the single reason you buy insurance, so you can be assured that when you buy a policy with us, that’s where the biggest chunk of your premium goes. We paid out over 99% of customers’ car insurance claims last year.

    Reinsurance/Industry Levies

    Like all insurers, we pay into various industry funds that have been set up to protect you, the customer. For instance, the Financial Services Compensation Scheme protects you against an insurer going bust and the Motor Insurers’ Bureau will compensate you if you are hit by an uninsured driver.


    It costs to keep the lights on. Like any business, expenses are necessary to keep us running. That’s why some of your premium goes towards our employees’ salaries and the cost of our offices, as well as investing in the most innovative technologies to make your experience with us as smooth and simple as possible.

    Insurance Premium Tax

    The Government adds tax to your insurance premium. It’s called Insurance Premium Tax, or IPT for short. Unfortunately, this is the one part of your premium we have no control over. However, we do work hard on making sure the Government understands the impact this tax has on customers and to persuade them that 12%* is plenty!

    Calculations based on 2015, 2016 AXA Car Insurance Policies. *IPT is 12% on top of your premium but it makes up 10.7% of the overall cost to you. Percentages rounded to the nearest whole number.