LONDON, July 21, 2022 — Comprehensive car insurance premiums have increased by 6% (£32) during the last 12 months, with UK motorists now paying £554 on average, according to the latest Confused.com Car Insurance Price Index in association with WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.
Car insurance premiums have now seen consecutive annual increases for the last two quarters, following the implementation of the new FCA pricing rules on 1 January 2022. Motor insurance premiums have now also risen for three quarters in a row, with a marginal rise of 1% (£4) recorded in the last three months, 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.
| 2021 Q2 | 2022 Q2 | |
|---|---|---|
| Average Premium* | £522 | £554 |
| % Change in Quarter* | -3% | +1% |
| £ Change in Quarter* | -£16 | +£4 |
| % Change Annually* | -12% | +6% |
| £ Change Annually* | -£71 | +£32 |
Source: WTW / Confused.com Car Insurance Price Index. *Values rounded to nearest whole number.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “A combination of rising accident frequency after the pandemic lull and surging inflation sees upwards pressure on insurance prices coming from claims costs and repairs. These challenges are compounded by insurers also having to respond to the FCA’s pricing reforms, effective from January, which bans renewal prices being higher for existing customers than for new business.”
From April to June 2022, the cost of comprehensive car insurance increased the most in Outer London, where drivers saw a quarterly rise of 3% (£17), with average premiums now costing £704. Drivers in the South of England benefited from the greatest quarterly drop in prices, with their insurance premiums decreasing on average by 1% to £437.
Inner London remains the most expensive region, where prices are now on average £882 having increased in the last quarter by 2% (£18). Manchester and Merseyside (£701) continues to be the most expensive area outside of the capital, and only marginally less expensive than average premium prices in Outer London (£704). The Scottish Borders retains its position as the cheapest region for car insurance, where prices average £366, closely followed by the South West of England (£373).
| 2021 Q2 | 2022 Q2 | |
|---|---|---|
| Inner London | £808 | £882 |
| Outer London | £651 | £704 |
| Manchester / Merseyside | £675 | £701 |
| West Midlands | £635 | £659 |
| Leeds / Sheffield | £602 | £639 |
Source: WTW / Confused.com Car Insurance Price Index. *Values rounded to nearest whole number.
More locally focused data shows motorists in Enfield, Motherwell and Lancaster experienced the sharpest quarterly rise of 4% taking their average premiums to £730, £490 and £425 respectively.
West Central London (£1,046) continues to be the most expensive postcode in the country and the only one where premiums on average exceed £1,000. Meanwhile, Llandrindod Wells in Wales remains the cheapest town in the UK, with drivers paying an average bill of £339 in the second quarter of 2022 for comprehensive car insurance.
Female drivers aged between 17 and 20 saw the greatest quarterly increase of just over 3% (£32), taking their premiums to £1,076, followed by male drivers aged 71 and over, who are now paying on average £404 after a 3% shift in prices (£11) in the second quarter of 2022. Male drivers aged between 17 and 20 are still paying the most of any demographic, now paying on average £1,511, while female drivers aged between 66 and 70 benefit from the lowest annual premium at £273.
“With premium rates well below the level needed to keep up with inflation, which is surging at its fastest pace in 40 years, insurers are bracing themselves for rising costs.”
Tim Rourke | UK Head of P&C Pricing, Product, Claims and Underwriting at WTW.
Tim Rourke said: “Motor insurance prices have yet to skyrocket, despite the cost pressures, and remain fairly low by historical standards. Looking ahead, the picture is more mixed with the industry facing a raft of challenges over the second half of 2022 and into 2023. With premium rates well below the level needed to keep up with inflation, which is surging at its fastest pace in 40 years, insurers are bracing themselves for rising costs, such as more expensive repairs due to increasingly sophisticated vehicles, and ongoing supply chain issues forcing longer repair times.”
Louise O’Shea, CEO at Confused.com comments: “While they may not be the most expensive prices on record, we are now seeing some of the highest car insurance premiums in close to two years. This was to be expected, after a period of extremely low prices during COVID-19. However, with the current economic situation being faced by both businesses and consumers, I have no doubt we have another turbulent period ahead of us.
“There is an opportunity now for insurers to be as competitive as possible with their pricing, as consumers look to make savings wherever possible. And it’s important that as an industry we are helping our customers to find these savings.”
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.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.
Following FCA pricing changes, premiums increased by 4% during the first quarter of 2022 and 2% over the last 12 months, with motorists now paying £550.
Motorists now paying £97 less than 12 months ago, which is the second largest fall in prices since the launch of the Willis Towers Watson/Confused.com Index in 2006.
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.
