The latest Confused.com Car Insurance Price Index, in association with WTW, shows an increase in comprehensive motor insurance premiums in the UK both in the last 12 months and quarter.
“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,” said WTW’s UK head of property & casualty pricing, product, claims, and underwriting Tim Rourke (pictured).
“These challenges are compounded by insurers also having to respond to the FCA’s (Financial Conduct Authority) pricing reforms, effective from January, which bans renewal prices being higher for existing customers than for new business.”
In the second quarter of 2022, car insurance premiums stood at £554 on average – a 6% jump from £522 in the same period last year. From the previous quarter, the rise was less steep, at 1%.
According to the index, the cheapest region when it comes to motor insurance remains the Scottish Borders, where the average cost in Q2 was £366. As for the highest price tag, Inner London continues to be on top of the pile, with policyholders there paying an average of £882.
Rourke added, though: “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.”
Meanwhile, for Confused.com chief executive Louise O’Shea, an opportunity exists for insurers to be as competitive as possible in terms of pricing, as consumers seek to make savings where they can, given the current economic landscape.
