Motor Insurance On The Rise Again

Mon 9th May 2022

While motorists have been squeezed at almost every angle for owning a car, one of the aspects of owning a car, insurance, has remained relatively low, but that is about to change.

Latest figures published this month by Confused.com and insurance broker Willis Towers Watson found that for the first time in 18 months, motorists will be paying more for their premium than they did in the previous year.

The average premium is now £550, which is two per cent more expensive than this time last year, but is a reflection on a general trend in car insurance, which has seen prices slowly getting higher. For example, those who get a car insurance policy today will pay on average £36 more than they would have if they bought insurance six months ago.

Analysts predicted that motor insurance would rocket at the start of the year after the Financial Conduct Authority banned insurers from penalising loyal customers by charging them more compared to new customers. The practice might have ended in theory, but in practice Confused’s research found that those who stuck with their insurer paid £39 more, while those who shopped around might have only seen a £12 increase.

One of the main factors on the year-on-year rise in insurance prices is that there are simply more cars on the road, as pandemic lockdowns are now a thing of the past, and insurers are no longer passing any savings on to consumers.

“Just like many of our household bills, car insurance costs are starting to increase, and this is mostly down to the fact that we’re driving a lot more now than we were 12 months ago, and this means the number of claims insurers are paying out on is likely to have increased too,” said Louise O’Shea, CEO at Confused.com.

“It’s worrying that so many people believed the pricing changes that came into effect in January would guarantee them a cheaper price, and I have no doubt they had quite a shock when they received their renewal notice and it was higher. This is purely down to the fact that the cost of insurance is going up, and this stands for renewal prices too."