UK car insurance prices are the lowest they have been for five years following a significant drop in claims during successive lockdowns, new analysis has revealed.
The findings by Willis Towers Watson (WTW) show that comprehensive car insurance prices fell by 3% in the second quarter of this year to £522 on average, which is the lowest they have been since early 2016.
Premiums have also decreased by 12% over the last year, which is the second biggest annual drop since 2014, with prices now having fallen for three consecutive quarters.
Graham Wright, senior director at WTW, said that COVID-19 and regulatory pressures have meant that the personal lines insurance industry is now braced for “one of the most turbulent times in its history.”
“Even without the pandemic, the regulatory reforms sweeping across the sector, including the Financial Conduct Authority’s ban on general insurance price walking, and Ministry of Justice whiplash reforms, are creating simultaneous pressure for prices to both rise and fall respectively,” he added.
From April to June 2021, the cost of comprehensive car insurance has been on a downward trend across every region in the UK, except for Northern Ireland, which saw a 1% rise in premiums.
Drivers in the inner London and the Manchester/Merseyside regions benefited from the greatest quarterly drop in prices, with their insurance premiums decreasing on average by 5% to £808 and £675, respectively.
West Central London remains the most expensive place in the UK to buy car insurance, with drivers now paying on average £981, while the cheapest town is now Llandrindod Wells in Wales, where drivers are paying an average of £319.
Female drivers aged 71 or over benefited from the greatest price fall, compared to other age groups, seeing a 4% quarterly price decrease, while, female drivers aged between 17 and 20, and male drivers aged between 66 and 70, experienced the smallest drop in prices of 2%.
Although insurers have been able to provide cheaper premiums thanks to falling claims during the pandemic, Wright said that premiums could rise again soon.
“With more cars expected to return to the road when lockdown rules are eased further from 19 July, the increase in miles driven risks pushing premiums in the opposite direction towards pre-pandemic prices.”
Image credit: iStock
Author: Chris Seekings