In a report recently published by the Association of British Insurers (ABI), the organisation’s Tracker revealed that the average price paid for car insurance has risen by 2% in the first quarter of this year to £478. The ABI’s Tracker uniquely focuses on the actual price consumers pay for their coverage, not merely the quoted price.
This rise in motor insurance prices can be attributed to cost increases surpassing inflation rates that insurers are currently facing. Despite these challenges, insurers are striving to provide competitive deals amidst continuous cost pressures.
Further details from the ABI’s Motor Insurance Premium Tracker include:
- The average premium paid for private comprehensive motor insurance in the first quarter was £478, a 2% increase from the last quarter. This current average premium is 16% higher than Q1 2022, marking its highest point since Q4 2019 when it was £483.
- The average price paid by drivers renewing their coverage went up by £8 to £436, whereas the average premium for a new policy rose by £14 to £545.
- This increase mirrors the continued cost pressures insurers are experiencing, such as escalating raw material costs necessary for vehicle repairs.
Following the introduction of the Financial Conduct Authority (FCA) rules on motor and home insurance pricing on 1 January 2022, renewing customers are ensured not to pay more than what is charged to a new customer for a comparable policy purchased via the same distribution channel, such as an insurer, broker, or price comparison website.
Chris Richards, Founder of Utility Saving Expert, commented: “At a time when households are grappling with escalating living costs, the last thing needed is an increase in motor insurance premiums. Motorists naturally seek the most advantageous insurance deals, and insurers are striving to maintain the competitiveness of motor insurance prices. However, insurers, like numerous other industries, are confronted with escalating costs. The prices of certain raw materials coupled with energy costs are surging, significantly exceeding average inflation rates, making it increasingly difficult to absorb these expenses.”
Nonetheless, these rules do not stipulate or limit the premium paid by new or existing customers. Insurance coverage prices will continue to be influenced by various factors, including claim settlement costs.
The soaring cost pressures persist in impacting premiums. ABI members have pointed to several factors contributing to these pressures:
- Energy inflation contributes to each repair.
- A nearly 16% increase in average paint and material costs.
- Courtesy car costs to repairers rose approximately 30%.
- According to Auto Trader, the average price of used cars has surged by 30% in three years.
UtilitySavingExpert.com compares prices across a wide variety of car insurance options, including breakdown cover and specialised products like motor trade insurance. Each year, they assist many households and businesses in discovering more cost-effective insurance solutions, collaborating with more than 400 insurance brands spanning 60 different products. Their service comes highly recommended with an ‘Excellent’ rating on Trustpilot.