Drivers see average car insurance price rise by £88 in a year to highest level since 2012
Drivers see average car insurance price rise by £88 in a year to highest level since 2012
- The price of car insurance has increased by just over a fifth in the past year
- The average premium in the second quarter of 2023 was £511
Drivers have seen the average price of car insurance rise by just over a fifth over the past year to its highest level since 2012.
The average premium paid for private comprehensive insurance in the second quarter of 2023 was £511, up 7 per cent from the previous quarter.
According to the Association of British Insurers (ABI), the average price paid in Q2 2022 was £88 less, at £423.
The ABI said “ongoing cost pressures” faced by insurers, such as more expensive vehicle repairs, rising energy costs and labor costs, have driven up prices.
In total, insurers paid out £2.4bn in the first quarter of this year on all motor insurance claims – including theft, repairs and personal injury. That was 14 percent more than in the same period of 2022.
Motorists saw the average price of car insurance rise by just over a fifth over the past year, reaching the highest level since 2012 (stock image)
Within this, the cost to insurers of car repairs rose by a third (33 per cent) to £1.5 billion, the highest figure since the ABI began collecting this data in 2013.
One insurer recorded a 40 percent increase in labor costs between June 2022 and January this year, while the cost of replacement parts for many popular cars has risen by as much as a fifth over the past year, the association added.
The ABI’s analysis is based on 28 million policies sold in the past year. The latest tracker reveals that in the second quarter of this year – when 7 million policies were sold – the average price motorists paid to renew their insurance cover increased by £36 from the previous quarter to £471, while the average premium for a brand new policy increased by £21 to £566.
Financial Conduct Authority (FCA) pricing rules for motor and home insurance introduced last year ensure that the price paid by renewing customers does not exceed the price charged to an equivalent new customer for a comparable policy purchased through the same distribution channel.
But the rules do not determine or limit the level of the premium paid.
Mervyn Skeet, director of general insurance for the ABI, said: ‘Times continue to be difficult for motorists and car insurers alike. With many families facing higher living costs, no one wants their car insurance costs to rise.”
He said insurers remain ‘committed to ensuring that motor insurance remains as competitively priced as possible’, but that this is ‘increasingly challenging’ given the continued rising costs they face.
Mr Skeet added: ‘We would urge anyone concerned about being able to pay their insurance to speak to their car insurer to see what options are available. And despite the cost pressure, it can still pay off to shop around to get the policy at the best price.’
Overall, insurers paid out £2.4 billion in all motor insurance claims in the first quarter of this year – including theft, repairs and personal injury (stock image)
Jenny Ross, editor of consumer magazine Which? Money, said premiums hitting record highs, come at the worst possible time for consumers already facing cost pressures in a number of other areas.
She added: “Motorists may be wondering if insurers are passing on increased costs at this time. The Financial Conduct Authority’s new consumer duty means that insurers must be able to demonstrate that the products they sell offer fair value.’
Ms Ross said that if insurers cannot justify the prices they charge, they should “take action from the regulator”.