The cost of car insurance premiums has risen for the first time in 18 months, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson (WTW).
The last 12 months saw comprehensive car insurance climbing 2%, bringing the average premium from £538 in Q1 2021 to £550 in Q1 2022. Recent pricing changes by the Financial Conduct Authority (FCA) pushed premiums to increase at a faster rate of 4% during the first quarter of 2022.
Tim Rourke (pictured), UK head of P&C pricing, product, claims and underwriting at WTW, said more motorists on the roads means more claims, and with inflationary pressures in place, insurance premiums are bound to rise.
“Throughout the peak of the pandemic we saw motor insurance premiums consistently fall. But as people return to more normal patterns of work and life, we are seeing those reductions
in premiums gradually unwind,” Rourke said. “The rest of 2022 is likely to be characterised by persistently high inflation and insurers are also adjusting to the new FCA pricing rules while maintaining margins. With that in mind, we expect motor premiums to continue to trend upwards throughout the rest of this year as prices return towards their pre-pandemic peak.”
The most expensive regions to get car insurance are Inner London (£864), Manchester (£697), Outer London (£687), West Midlands (£657) and Leeds (£627), with Manchester and West Midlands having the smallest quarterly increases at 2%. Meanwhile, the Scottish Borders is the cheapest region for car insurance at £370 despite high quarterly growth of 7%.
For Louise O’Shea, chief executive officer at Confused.com, a competitive market is brewing, as evidenced by current pricing trends where insurers are keen to attract new customers.
“With prices increasing across the board, our research shows this has been reflected in people’s renewals, with many seeing their renewal price has increased more than the cost of a new policy has increased,” O’Shea said. “This means insurers are having to adjust their pricing and compete to attract new customers. This is a battle we’re likely to see for some time.”