LONDON, April 21, 2022 — Comprehensive car insurance premiums have risen by 2% (£12) during the last 12 months, with UK motorists now paying £550 on average, according to the latest Confused.com Car Insurance Price Index in association with WTW (Willis Towers Watson), a leading global advisory, broking and solutions company.
This is the first annual rise in car insurance premiums since the autumn of 2020, following a second consecutive quarter of price rises and implementation of the new FCA pricing rules on 1 January 2022, as car insurance premiums increase by 4% (£21) in the first three months of this year, 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.
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Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “Throughout the peak of the pandemic we saw motor insurance premiums consistently fall. But as people return to more normal patterns of work and life, we are seeing those reductions in premiums gradually unwind. This has been caused by a rise in claims, due to an increase in the number of journeys being taken, coupled with increasing inflationary pressures across the whole economy.”
The cost of comprehensive car insurance over the last three months increased across all regions in the UK, with drivers in the East and North East of Scotland experiencing the sharpest quarterly rise at 7% (£25), with average premiums now costing £401, followed by the Scottish Borders (£22), Scottish Highlands and Islands (£24) and the South West of England (£23), which all saw a 7% rise.
Despite the high quarterly increase, the Scottish Borders continues to be the cheapest region for car insurance, where prices average £370, followed by the South West of England (£376). The smallest quarterly increases of 2% were seen in Manchester/Merseyside (£15), where average premiums are now £697, and the West Midlands (£14) nudging average annual premiums up to £657.
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More locally focused data shows motorists in Dorchester (10%) experienced the greatest quarterly increase in premiums to £371, with West Central London (£1053) and East London (£988) continuing to be the most expensive postcodes in the country. Even with the 7% quarterly rise in prices, Llandrindod Wells in Wales remains the cheapest town in the UK, with drivers paying an average bill of £338 in the first quarter of 2022 for comprehensive car insurance.
The demographic that saw the greatest quarterly increase was people aged over 70 who saw their car insurance rise by 7% on average, taking premiums to £376. Eighteen-year-old drivers are still paying the most of any demographic – despite premiums increasing only 0.4% this quarter – taking average premiums to £1419.
We expect motor premiums to continue to trend upwards throughout the rest of this year as prices return towards their pre-pandemic peak.”Tim Rourke | UK Head of P&C Pricing, Product, Claims and Underwriting at WTW
Tim Rourke said: “The rest of 2022 is likely to be characterised by persistently high inflation and insurers are also adjusting to the new FCA pricing rules while maintaining margins. With that in mind, we expect motor premiums to continue to trend upwards throughout the rest of this year as prices return towards their pre-pandemic peak.”
Louise O’Shea, CEO at Confused.com comments: “This is the second consecutive quarter where we’ve seen car insurance prices increase, which suggests that unfortunately this is something we were going to face regardless of the FCA pricing changes. But now we’re also seeing an arguably very competitive market.
“With prices increasing across the board, our research1 shows this has been reflected in people’s renewals, with many seeing their renewal price has increased more than the cost of a new policy has increased. And this means insurers are having to adjust their pricing and compete to attract new customers. This is a battle we’re likely to see for some time, which is going to make insights into the pricing trends even more attractive to insurers.
“Prices could continue to increase simply because insurers are likely to be facing more claims than last year, as people start to drive more frequently, and this just means insurers will have to be as competitive as possible. And in turn consumers will need to continue to shop around, as the assumption that renewal prices won’t increase clearly isn’t true.”
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 Research carried out by One Poll on behalf of Confused.com of 2,000 UK drivers who have car insurance policies. This was conducted between 8 April and 13 April 2022