ILC ARTICLE

Premiums down after FCA pricing rules

10th May 2022

Motor insurance has fallen to its lowest level in nearly seven years, according to the ABI’s latest Motor Insurance Tracker.

It found that the average premium dropped five per cent in the first quarter of 2022 to £416, the lowest average price since the third quarter of 2015.

Meanwhile, the tracker also identified a growing gap in prices between new and renewed premiums in the months since the Financial Conduct Authority introduced new pricing rules on 1 January. It found that the average premium for new policies was £480, up £34 on the same quarter in 2021, while the average price for renewed policies fell £55 to £375.

James Dalton, ABI Director, General Insurance Policy, said:“Like other sectors, motor insurers face rising costs. While it is going to be extremely challenging for these to be absorbed, insurers are doing all they can to keep prices as competitive as possible as millions of household cope with the cost of living crisis.

“As the FCA has said, the impact of their reforms to pricing rules introduced on 1 January this year could lead to some consumers paying higher prices if they used to benefit from significant new business discounts. For some it could still pay to shop around for the policy that best meets their needs.”