Comprehensive car insurance premiums have increased by 6% (£32) over the last 12 months, with drivers now paying £554 on average, according to the latest Confused.com Car Insurance Price Index.
Car insurance premiums have now seen consecutive annual increases for the last two quarters, the latest index, in association with WTW, has found. These increases follow the implementation of new pricing rules on 1 January 2022.
Motor insurance premiums have now also risen for three quarters in a row, with a marginal rise of 1% (£4) recorded in the last three months.
Tim Rourke, UK head of property and casualty pricing, product, claims and underwriting at WTW, commented: “A combination of rising accident frequency after the pandemic lull and surging inflation sees upwards pressure on insurance prices coming from claims costs and repairs.”
“These challenges are compounded by insurers also having to respond to the FC’s pricing reforms, effective from January, which bans renewal prices being higher for existing customers than for new business.”
Rourke continued: “Motor insurance prices have yet to skyrocket, despite the cost pressures, and remain fairly low by historical standards. Looking ahead, the picture is more mixed with the industry facing a raft of challenges over the second half of 2022 and into 2023.”
“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.”
Louise O’Shea, chief executive officer at Confused.com, commented: “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.”
“There is an opportunity now for insurers to be as competitive as possible with their pricing, as consumers look to make savings wherever possible. And it’s important that as an industry we are helping our customers to find these savings.”