Car insurance prices have increased by 6% over the last year, with UK motorists paying an average of £32 more today than they were 12 months ago.
That is according to Willis Towers Watson (WTW) and Confused.com's latest Car Insurance Price Index, which shows that annual premiums now cost £554 on average.
The findings, based on over six million customer quotes per quarter, also show that premiums have risen for the last two consecutive quarters, following the implementation of the Financial Conduct Authority's (FCA) new pricing rules on 1 January 2022.
Tim Rourke, UK head of P&C pricing, product, claims and underwriting at WTW, said that a combination of rising accident frequency after the pandemic and surging inflation has seen upwards pressure on insurance prices coming from claims costs and repairs.
“These challenges are compounded by insurers also having to respond to the FCA’s pricing reforms, effective from January, which bans renewal prices being higher for existing customers than for new business,” he continued.
“With premium rates well below the level needed to keep up with inflation, which is surging at its fastest pace in 40 years, insurers are bracing themselves for rising costs, such as more expensive repairs due to increasingly sophisticated vehicles, and ongoing supply chain issues forcing longer repair times.”
From April to June 2022, the cost of comprehensive car insurance increased the most in outer London, where drivers saw a quarterly rise of 3%, or £17, with average premiums now costing £704.
The findings also show that drivers in the south of England benefited from the greatest quarterly drop in prices, with their insurance premiums decreasing on average by 1% to £437.
Inner London remains the most expensive region, where prices are now on average £882, while the Scottish borders retains its position as the cheapest region for car insurance, where prices average £366.
Male drivers aged between 17 and 20 are still paying the most of any demographic, on £1,511, while female drivers aged between 66 and 70 benefit from the lowest annual premium at £273.
Louise O’Shea, CEO at Confused.com said: “While they may not be the most expensive prices on record, we are now seeing some of the highest car insurance premiums in close to two years.
“This was to be expected, after a period of extremely low prices during COVID-19. However, with the current economic situation being faced by both businesses and consumers, I have no doubt we have another turbulent period ahead of us.”
Image credit: iStock
Author: Chris Seekings