UK car insurance premiums fall but volatility ahead
24th January 2022Tweet
Comprehensive car insurance premiums have fallen by six per cent (£36) during the last 12 months, with UK motorists now paying £539 on average, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson (WTW).
The average cost of car insurance, after falling for four straight quarters, increased for the first time since the autumn of 2020 with a price rise of five per cent (£25) in the final quarter of 2021, according to 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 at eight per cent (£33), with average premiums now costing £465, followed by Manchester and Merseyside, where drivers saw a six per cent rise (£39). The smallest quarterly increase of three per cent (£9) was seen in South West England, nudging average annual premiums up to £355.
The demographic that saw the greatest quarterly increase were young male drivers aged between 21 and 30 who saw their car insurance rise by six to eight per cent, taking the premiums of those aged 21-25 to £1,147 and £858 for those aged 26-30. Male drivers aged between 17 and 20 are still paying the most of any demographic – with premiums increasing by four per cent – and now pay on average £1480.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said, “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. How insurers respond to the new rules through pricing and product strategy will determine just how turbulent the next few months become.”
Louise O’Shea, CEO at Confused.com commented, “The increases we’re seeing in car insurance prices are not unexpected. 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.”Tweet