Auto insurance premiums saw a record decline in 2024, with young drivers getting the biggest cuts

According to new data, car insurance prices fell by a record amount at the end of 2024 as competition in the industry began to heat up again.

The latest general insurance price index from Pearson Ham Group shows that car insurance premiums fell by 5.5 percent in the fourth quarter of 2024, bringing the total reduction in the second half of the year to -10 percent.

Prices have fallen consistently every month since April, with an overall price drop of 16 percent for drivers in 2024, down from a peak of 46 percent higher at the end of 2023.

Despite the reductions, prices remain 21.4 percent higher than at the beginning of 2020.

Motorists have seen their insurance costs rise significantly in recent years as persistently high inflation pushed up the costs of auto parts and labor.

Now it appears the market has reached a turning point and premiums are starting to reach more manageable levels.

The index shows that younger drivers experienced the biggest year-on-year declines, with premiums for those under 30 falling by almost 17 percent over the year.

Drivers between the ages of 50 and 60 followed closely, declining by 16 percent, while the reduction for drivers over 60 averaged less than 14 percent.

The smallest decline occurred among drivers over 70, whose insurance premiums fell by 13.4 percent.

The price drop is largely the result of increased competition in the sector, as some insurers opted to make more aggressive cuts in the second half of the year.

Stephen Kennedy, director of Pearson Ham Group, said: ‘This deflation is providing much-needed relief for many policyholders, especially younger drivers who have seen some of the sharpest increases in recent years.’

Elsewhere, home insurance premiums saw a more modest decline, with quoted prices falling 1.7 percent in the fourth quarter.

Most of the decline occurred in December, with a decline of 1.3 percent, the largest decline since May 2022.

Despite the downward trend, prices remain almost 12 percent higher than a year ago and in two years premiums have increased by 56 percent.

This is largely due to challenging claims costs and frequency, says Pearson Ham Group, although insurers are likely to move away from steep price increases in the coming months.

Frances Luery, Product Manager at Pearson Ham Group, said: ‘The fall in home insurance prices in the fourth quarter signals a welcome shift in the market after prolonged periods of sharp inflation.

“While premiums remain significantly higher than two years ago, this recent stabilization is a sign of things to come this year.”