We use cookies to improve this site and enable full functionality. You can change your cookie settings at any time using your browser. Our cookie policy.

Revealed – what’s happening with UK car insurance costs?

Revealed – what’s happening with UK car insurance costs? | Insurance Business UK

Revealed – what’s happening with UK car insurance costs?

Comprehensive car insurance premiums are now the cheapest they’ve been since the middle of 2015, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.

Based on the index, which is compiled using anonymous price data from all enquiries submitted on Confused.com, motorists in the UK now pay an average of £514 for comprehensive car insurance.

The third-quarter figure represents a 16% drop from the same period in 2020, as well as the biggest annual decrease since 2014. Compared to the second quarter of this year, the Q3 average signifies a 2% fall.

“The downward trend in prices has continued for four consecutive quarters, driven primarily by the lower exposures and claims experience resulting from the COVID pandemic,” said Stephen Jones (pictured), UK property and casualty consulting lead at Willis Towers Watson.

“However, the rate at which prices are falling has slowed in the last three months, explained in part by the increased number of commuters returning to driving since the easing of lockdown rules, UK summer staycations, and other changed driving patterns. But of course, any trends here need to be balanced against the expectations around any rate changes which will be required to fulfil the FCA’s (Financial Conduct Authority) price walking ban.”

What remains unchanged are the most expensive and cheapest places in the UK to purchase car insurance. In West Central London, the average price stands at £977, while motorists in Llandrindod Wells pay an average of £307.

“It’s likely that prices could start to creep up as people return to work and people are spending more time travelling on the road, which all means the risk of accidents is a lot higher,” commented Confused.com chief executive Louise O’Shea. “We’re already starting to see this in some areas of the UK. And this will mean that the overall price of insurance will increase, which means the cost of renewal will too.

“From January there will be some important changes to the way insurers are pricing customers, and the concern is that customers will accept a flat or slightly lower price and simply choose to renew. But the current savings on offer show that insurers are willing to give consumers a better deal, and even if the market changes, this pattern will likely remain.”

Meanwhile, Jones pointed to “extreme uncertainty” moving forward.

The Willis Towers Watson executive stated: “The FCA’s price walking ban from January 01, 2022 has received significant senior management attention during 2021 and consumed significant amounts of insurers’ pricing resources.

“The pricing impacts of these efforts will emerge in the months ahead. Together with the widespread supply chain issues affecting many industries including automotive repairs, the outlook on pricing for 2022 is extremely uncertain.”