Comp Premiums Up 58% Year-On-Year, Says Confused.com

The latest data from Confused.com shows that premiums are still rising, when like-for-like stats are compiled per quarter. According to the comparison site, Comprehensive car insurance premiums have increased sharply by 58% (£366) during the last 12 months, with UK motorists now paying £995 on average, according to the latest Confused.com Car Insurance Price Index in association with WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.

As IE said recently, this is probably the greatest challenge the industry faces in 2024. If premiums continue to rise to unaffordable levels, more people will simply drive uninsured, then those who do pay will pay even more as millions opt out of the system. It’s a cycle that will have huge consequences for insurers if things don’t change quickly.

Here’s the data;

Car insurance premiums have now risen for nine straight quarters since the last three months of 2021, and recorded an average price rise of 8% (£71) in the final quarter of 2023, according to the longest established and most comprehensive car insurance price index in the UK. The index is based on price data compiled from over six million customer quotes per quarter.

Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “The cost of car insurance spiralled in 2023 primarily due to the soaring price of used cars, although there is evidence of a market readjustment with values having slipped for the last four months.

“Insurers have also had to pass on the rising cost of spare parts and materials, more expensive repairs as cars become more sophisticated, labour shortages and extended vehicle loan times.”

LONDON RISKS

All regions across the UK recorded exceptional price rises of over 50% in insurance premiums over the last 12 months. Drivers in Central Scotland saw the largest percentage increase in the cost of comprehensive car insurance, where drivers saw an annual rise of 64% with average premiums now costing £897. The smallest annual increase was seen in Central and North Wales, where drivers still saw a significant annual rise of 51%, with average premiums now costing £652.

The South West of England continues to be the cheapest region for car insurance, with average premiums now costing £636. Inner London remains the most expensive region, where prices are now on average £1607 having increased in the last 12 months by 59% (£599). Manchester / Merseyside (£1233) and the West Midlands (£1224) remain the most expensive areas outside of the capital.

More locally focused data shows motorists in Edinburgh and Glasgow experienced the sharpest annual rises of 65% taking their average premiums to £806 and £998 respectively. West Central London continues to be the most expensive postcode in the country where drivers now pay an average bill of £1936 while Llandrindod Wells in Wales remains the cheapest town in the UK with prices on average now costing £584.

YOUNG DRIVERS

Drivers aged 17-20 took the largest hit of any age group, with those aged 17 seeing the sharpest annual rise as prices jumped by £1423 (98%) compared to a year ago and are now on average paying £2877.

Tim Rourke said: “The sharp rise in average car insurance premiums masks an even more dramatic rise in premiums for electric vehicles. Insurers face unique challenges in covering EVs with advanced technology requiring specialist knowledge and longer repair times.

“As UK carmakers ramp up their sales of EVs to meet mandatory targets, third-party claims involving EVs will also gather pace. Faced with this extra challenge, insurers will be keen to see if further advancements in technology and the continued decline in EV new vehicle costs lead to reduced frequency and costs, offsetting some of the repair-side pressures.”

Steve Dukes, CEO at Confused.com comments: “UK motorists won’t be surprised by news of record car insurance price rises, but they will be disappointed. The crumb of comfort will be that increases are somewhat smaller than in previous quarters, so many will be hoping this is a sign of a more stable period ahead.

“In addition to the average price rises, we have seen different customer groups affected to increasingly different degrees. Understanding and reacting to this has become increasingly important to insurance providers looking to make more informed pricing decisions.”