Comprehensive car insurance premiums in the UK fell by 16% over the past year, translating to an average decrease of £161, according to the “Confused.com Car Insurance Price Index”, which is produced in partnership with WTW.
As of the fourth quarter of 2024, the average premium stood at £834, marking the most significant annual reduction in over a decade.
The drop follows two years of steady increases in premiums from 2021 to 2023. The index, which is the UK’s longest-running analysis of car insurance prices, revealed that premiums have now fallen for four consecutive quarters, with price reductions of 5% in Q1 (£54), 6% in Q2 (£59), and 2% in Q3 (£27).
Premium decreases were recorded across all regions of the UK, with reductions exceeding 10% in every area.
The steepest annual drop was observed in Manchester and Merseyside, where premiums declined by 19% (£235), bringing the average cost below £1,000 for the first time in 18 months, now at £998. Similarly, Inner London saw nearly a 19% decrease, with average premiums dropping by £299, from £1,607 to £1,308.
At the lower end of the scale, drivers in the Scottish Borders experienced the smallest decline, at 10%, with premiums now averaging £590.
South West England remains the cheapest region for comprehensive car insurance, with average premiums at £558. Inner London continues to hold the top spot as the most expensive region, while the West Midlands overtook Manchester/Merseyside as the costliest area outside London, despite a 17% annual decline bringing premiums to £1,015.
Local data highlighted significant reductions as well. In Oldham, for example, premiums fell by 21% (£291), with drivers now paying an average of £1,065. Conversely, West Central London remains the postcode with the highest premiums, at £1,731, even after an 11% decrease (£205).
Younger drivers saw the largest reductions in premiums over the past year. Premiums for 18-year-olds dropped by 18% (£557), bringing their average cost to £2,605. Similarly, drivers aged 20 experienced an 18% decrease (£467), with average premiums now at £2,061.
Older drivers also saw reductions, but the changes were smaller. For example, drivers aged 51 recorded a 12% decrease (£97), with premiums now averaging £699.
Tim Rourke, UK head of P&C pricing, product, claims, and underwriting at WTW, pointed to reduced motor claims frequency and lower inflation as key reasons for the falling premiums.
“Lower levels of inflation and sustained reduced motor claims frequency in 2024 allowed insurers to continue to drop rates for consumers, who have endured dramatic rises since the pandemic,” he said.
He added that motorists hope for further declines in 2025. However, how insurers navigate evolving market forces will be critical as they seek to manage costs and support customers.
Steve Dukes, CEO at Confused.com, noted that the competitive insurance market is creating opportunities for consumers and insurers alike.
“New policy prices have been decreasing steadily for 12 months, and we’re now seeing a significant shift in prices compared to last year. We’re also seeing significantly different approaches between insurers, which means for customers it’s a great time to be shopping around and for ambitious insurers it’s an opportunity to grow,” he said.