Comprehensive car insurance premiums have risen by 20% during the last 12 months, making the average cost of a car insurance policy the most expensive it has been since 2011, according to the latest Confused.com Car Insurance Price Index in association with WTW.
By the first quarter of 2023, premiums have increased by £107 with motorists now on average paying £657 – the average premium in the same period last year was £550.
Confused.com’s and WTW’s index is the longest established and most comprehensive car insurance price index in the UK. It is based on price data compiled from over six million customer quotes per quarter.
Car insurance premiums have also increased for six straight quarters following a price rise of 4% (£28) in the first quarter of 2023.
Also, for the last six months, rate inflation in the UK has been over 10%, and remains close to a 40-year high. This is directly impacting insurers and the higher costs they face, which are becoming increasingly challenging to absorb, WTW noted.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “Fast-paced inflation throughout the UK economy has driven up the costs insurers face in fulfilling claims, such as rocketing motor repair, parts and labour prices, that have in turn seen premiums surge.”
According to the index, price rises have been particularly severe for drivers of cars up to eight years old, which have been subject to annual increases of more than 20%, topped by 27% for drivers of three-year-old cars.
Similarly, higher priced cars have been subject to much more severe increases over the last year, with annual increases exceeding 30% for cars worth over £30,000, peaking at a rate of 37% for cars worth over £40,000.
Over the last 12 months, all regions across the UK recorded double-digit price rises in insurance premiums. In London, drivers saw the largest percentage increases in the cost of comprehensive car insurance, with an annual rise of 23%.
Average premiums now cost £1067 in Inner London and £845 in Outer London. The smallest annual increases were seen in the South West of England and the Scottish Borders, where drivers still saw a significant annual rise of 16%, with average premiums now costing £434 and £428 respectively.
The South West of England also continues to be the cheapest region for car insurance. Meanwhile, Manchester / Merseyside (£814) and the West Midlands (£787) remain the most expensive areas outside of the capital.
Additionally, the index pointed out that drivers aged 17-20 experience sharpest annual rise, with male drivers in that age bracket experiencing a percentage increase of 29% (£437) and female drivers seeing their premiums surge by 30% (£316) during the last 12 months, taking their premiums to £1930 and £1360 respectively.