Drivers warned of £132 average car insurance price
increase

Drivers warned of £132 average car insurance price increase

The cost of car insurance has risen by 18 per cent year on year, according to new Premium Drivers research from Compare the Market.

The study found that the typical premium now stood at £850, a £132 increase over the previous year.

The increase in the cost of car insurance in the past year may in part be due to a rise in the cost of claims for insurers.

Previously high inflation will have impacted many areas of the motor repair industry including the cost of spare parts, energy, and hiring mechanics.

Anna McEntee, Director at Compare the Market, said: “The substantial cost of car insurance is understandably causing concern for many motorists.

“Our research shows motor premiums have risen by more than £100 year-on-year. Drivers aged under 24 and over 80 are seeing the steepest increases. 

“Typically, insurers consider motorists in both age groups as more likely to make a claim which could lead them to see higher premiums.

“For those concerned about the cost of their motor premium, shopping around ahead of renewal is one of the best ways to try and save money on car insurance.

“We want to encourage older motorists who may be more inclined to stick with their existing insurer each year to compare prices ahead of renewal to see what deals are available.”

Over the longer term, motor insurance has tracked very close to inflation, the Association of British Insurers said.

In real terms, prices are £8 or 1.3% higher when compared to a previous peak at the end of 2017, according to the ABI. This is partly because prices fell significantly during the coronavirus pandemic, it said.

It added that 2023 was a “difficult year” for motor insurance margins, and that since 2017, costs for insurers to pay claims have increased by 23% in real terms.

Mervyn Skeet, the ABI’s director of general insurance policy, said: “We understand that car insurance costs are putting pressure on household finances. These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable.

“Even though these figures demonstrate a slowdown in price increases, we won’t be taking our foot off the gas when it comes to our work on tackling the cost of cover.”

The ABI previously set out steps that the industry is taking to combat the rise in the cost of motor insurance in February. Last week it announced that its members had agreed a set of aimed at helping to manage the costs for people paying for insurance on a monthly basis.

The association said it recommends that anyone struggling with the cost of their cover speaks to their insurer.

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