Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

UK car insurance premiums fall by 6%

Open-access content Wednesday 19th January 2022 — updated 3.02pm, Thursday 20th January 2022
UK car insurance premiums fall by 6%

The cost of comprehensive car insurance in the UK fell by 6% last year due to intense competition between insurers and fewer journeys taken during lockdowns.

That is according to Willis Towers Watson (WTW) and Confused.com's latest Car Insurance Price Index, which shows that motorists are now paying £536 on average, which is £36 less than 12 months ago.

However, after falling for four straight quarters, the average cost of car insurance increased by 5% in the final three months of 2021, indicating volatility in premiums for the year ahead.

This comes after the Financial Conduct Authority (FCA) last year confirmed new motor insurance rules that will ensure renewal quotes are not more expensive than they would be for new customers, thus removing the 'loyalty penalty'.

“More pricing volatility is expected in the coming months, with insurers competing to maintain margins as they adjust to the new FCA fair pricing rules,” said Tim Rourke, UK head of P&C pricing, product, claims and underwriting at WTW.

“How insurers respond to the new rules through pricing and product strategy will determine just how turbulent the next few months become. 

“Meanwhile, the pandemic will continue to put insurers under considerable pricing pressure as wholesale society changes evolve and disrupt the market, exacerbated by claims inflation potentially rising further in 2022 and the long-term impact of the whiplash reforms still unclear.”

WTW's Car Insurance Price Index is the longest established and most comprehensive car insurance price index in the UK, based on price data compiled from almost six million customer quotes per quarter.

The cost of comprehensive car insurance over the last three months increased across all regions in the UK, with drivers in Central Scotland experiencing the sharpest quarterly rise of 8%, followed by Manchester and Merseyside, where drivers saw a 6% rise. 

The smallest quarterly increase of 3% was seen in South West England.

The demographic that saw the greatest quarterly increase were young male drivers aged between 21 and 30 who saw their car insurance rise by 6-8%, taking the premiums of those aged 21-25 to £1147 and £858 for those aged 26-30.

“The increases we’re seeing in car insurance prices are not unexpected,” said Louise O’Shea, CEO at Confused.com. “Before the pandemic, Brexit was already causing the price of claims to inflate due to the cost and length of repairs. 

“Now with these issues heightened by the pandemic and therefore putting further pressure on insurers, we can expect prices to inflate even further over the coming months, regardless of any impact the recent FCA changes may have.

“What we could also see now is an incredibly competitive market. Insurers can no longer offer discounts to differentiate between new business and renewal, and so we could start to see many companies looking at the way they are pricing to become more attractive to customers. 

“And with this, insurers could be seeking out as much insight into pricing trends as possible to see how other companies are reacting.”

 

Image credit: iStock

Author: Chris Seekings

You may also be interested in...

IFoA calls on UK government to support financial resilience in levelling-up plans

IFoA calls on UK government to support financial resilience in levelling-up plans

The Institute and Faculty of Actuaries (IFoA) has urged the UK government to support individual financial resilience as part of its 'levelling-up' agenda over the next decade.
Monday 7th February 2022
Open-access content
Solvency II reforms risk 'increased volatility' to insurers' funds

Solvency II reforms risk 'increased volatility' to insurers' funds

Reforms to Solvency II being explored by the Prudential Regulation Authority (PRA) risk increased volatility and a material reduction in funds held by UK insurers to withstand shocks, new analysis suggests.
Tuesday 15th February 2022
Open-access content
Fourth-busiest year for insurance M&A recorded

Fourth-busiest year for insurance M&A recorded

Last year was the fourth-busiest for mergers and acquisitions (M&A) within the global insurance industry, with the pandemic encouraging companies to seek alternative routes to growth.
Wednesday 16th February 2022
Open-access content
Insurers urged to end support for Brazil's 'ruthless' oil and gas exploration

Insurers urged to end support for Brazil's 'ruthless' oil and gas exploration

Three insurance companies have been accused of insuring the majority of Brazil’s offshore oil and gas drilling, despite their public commitments to help tackle climate change.
Tuesday 25th January 2022
Open-access content
Net-zero emissions by 2050 to cost $9trn each year

Net-zero emissions by 2050 to cost $9trn each year

Capital spending on physical assets for energy and land-use systems will have to increase by 60% to around $9trn (£5.7trn) every year to deliver net-zero emissions across the global economy by 2050.
Wednesday 26th January 2022
Open-access content
Men found to save £90k more than women after age 50

Men found to save £90k more than women after age 50

UK men typically save over £90,000 more into their pensions than women between the ages of 50 and 64, according to analysis by PensionBee.
Wednesday 16th February 2022
Open-access content
Filed in
News
Topics
General Insurance
Finance
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Reserving Analyst

London (City of)
Negotiable
Reference
149485

Senior GI Modeler - Capital and Planning

London (Central)
£ excellent
Reference
149436

Risk Oversight Manager

Flexible / hybrid with a minimum of 2 days per week office-based
£ excellent
Reference
149435
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ