LONDON, January 19, 2022 — Comprehensive car insurance premiums have fallen by 6% (£36) during the last 12 months, with UK motorists now paying £539 on average, according to the latest Confused.com Car Insurance Price Index in association with WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company.
The average cost of car insurance, after falling for four straight quarters, increased for the first time since the autumn of 2020 with a price rise of 5% (£25) in the final quarter of 2021, according to the longest established and most comprehensive car insurance price index in the UK, based on price data compiled from almost six million customer quotes per quarter.
| 2020 Q4 | 2021 Q4 | |
|---|---|---|
| Average Premium* | £575 | £539 |
| % Change in Quarter* | -6% | +5% |
| £ Change in Quarter* | -£36 | +£25 |
| % Change Annually* | -9% | -6% |
| £ Change Annually* | -£55 | -£36 |
Source: WTW / Confused.com Car Insurance Price Index. *Values rounded to the nearest whole number.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “The impact of motorists making fewer journeys due to the COVID-19 lockdown, combined with intense competition in the industry, caused prices to drop for 12 months through to the autumn of 2021. The rise in prices since then most likely reflects the predicted volatility ahead of the new FCA pricing rules being implemented on 1 January, combined with claims costs increasing since lockdown restrictions eased.”
The cost of comprehensive car insurance over the last three months increased across all regions in the UK, with drivers in Central Scotland experiencing the sharpest quarterly rise at 8% (£33), with average premiums now costing £465, followed by Manchester and Merseyside, where drivers saw a 6% rise (£39). The smallest quarterly increase of 3% (£9) was seen in South West England, nudging average annual premiums up to £355.
Manchester and Merseyside (£685) and the West Midlands (£655) continue to be the most expensive areas outside of the capital, and only marginally less expensive than average premium prices in Outer London (£686). The Scottish Borders is the cheapest region for car insurance, where prices on average cost £342, followed by South West England (£355).
More locally focused data shows motorists in West Central London and Glasgow1 experienced the greatest quarterly increases, with a double digit price rise in both areas at 10%, increasing their premiums to £1079 and £525 respectively. West Central London also remains the UK’s most expensive postcode for motor insurance, where drivers are paying on average £124 more than drivers in East London, the next most expensive postcode. Despite a 6% quarterly rise in prices, Llandrindod Wells continues to be the cheapest town in the UK, with drivers paying an average bill of £3262 at the end of 2021 for comprehensive car insurance.
The demographic that saw the greatest quarterly increase were young male drivers aged between 21 and 30 who saw their car insurance rise by 6-8%, taking the premiums of those aged 21-25 to £1147 and £858 for those aged 26-30. Male drivers aged between 17 and 20 are still paying the most of any demographic - with premiums increasing by 4% - and now pay on average £1480.
“More pricing volatility is expected in the coming months, with insurers competing to maintain margins as they adjust to the new FCA fair pricing rules.”
Tim Rourke,
Head of P&C Pricing, Product, Claims and Underwriting at WTW
Tim Rourke said: “More pricing volatility is expected in the coming months, with insurers competing to maintain margins as they adjust to the new FCA fair pricing rules. How insurers respond to the new rules through pricing and product strategy will determine just how turbulent the next few months become. Meanwhile, the pandemic will continue to put insurers under considerable pricing pressure as wholesale society changes evolve and disrupt the market, exacerbated by claims inflation potentially rising further in 2022 and the long-term impact of the whiplash reforms still unclear.”
Louise O’Shea, CEO at Confused.com comments: “The increases we’re seeing in car insurance prices are not unexpected. Before the pandemic, Brexit was already causing the price of claims to inflate due to the cost and length of repairs. Now with these issues heightened by the pandemic and therefore putting further pressure on insurers, we can expect prices to inflate even further over the coming months, regardless of any impact the recent FCA changes may have.
“What we could also see now is an incredibly competitive market. Insurers can no longer offer discounts to differentiate between new business and renewal, and so we could start to see many companies looking at the way they are pricing to become more attractive to customers. And with this, insurers could be seeking out as much insight into pricing trends as possible to see how other companies are reacting.”
The index is compiled using anonymous data from all enquiries submitted on Confused.com. The prices used for analysis are based on an average of the best five quotes received.
The Confused.com car insurance price index has been running for more than 10 years. In this time, the price comparison market has grown significantly (80% market share), and the make-up of the UK driving population has changed along with it. We’ve been monitoring trends within the car insurance industry, and have updated our method utilising machine learning techniques to one that reflects today’s UK motor market. This has resulted in an adjustment to the car insurance prices reported in our index.
Launched in 2002, Confused.com was the UK's first price comparison site for car insurance and is one of the UK’s biggest and most popular price comparison services, generating over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include small van insurance, motorcycle insurance, car buying, and car finance, as well as a number of tools designed to save drivers money on motoring.
Confused.com is not a supplier, insurance company or broker. It provides an objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com’s service is based on the most up-to-date information provided by UK suppliers and industry regulators.
WTW’s Insurance Consulting and Technology business has over 1,200 colleagues operating in 35 markets worldwide. It is a leading provider of advice, solutions and software – primarily to the insurance industry. Its consulting services help clients manage risk and capital, improve business performance and create competitive advantage – by focusing on financial and regulatory reporting, enterprise risk and capital management, M&A and corporate restructuring, products, pricing, business management and strategy.
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
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1 While the Shetland Isles recorded a larger price decrease in Q4 2021, their small sample size mean the results are not considered statistically significant.
2 The Hebrides recorded a cheaper annual premium (£313), but has been discounted due to having a similarly small sample size.
Restrictions see sharp fall in prices since the start of the pandemic in Q1 2020.
Prices fall by 1% to £765 in the last three months, with drivers now paying £50 less than they were at the start of 2020.
