LONDON, July 19, 2023 — Comprehensive car insurance premiums have soared by a record 40% (£222) during the last 12 months, with UK motorists now paying £776 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 are at their highest ever recorded levels since the WTW/Confused.com Car Insurance Price Index was launched in 2006. The previous peak was 12 years ago in the second quarter of 2011 when the average premium was £663. At 40%, the annual rise in motor insurance costs continues to outstrip CPI inflation, held at 8.7% in May.
Car insurance premiums have also increased for seven straight quarters following a price rise of 18% (£119) in the second quarter of 2023, according to the longest established and most comprehensive car insurance price index in the UK. Based on price data compiled from over six million customer quotes per quarter, this is the largest quarterly increase on record and by a significant margin. The previous fastest quarterly rise was set in the second quarter of 2010, when prices rose by 12%.
“Motorists are facing the sharpest acceleration in premium rates, as insurers continue to grapple with a cocktail of rising costs.”
Tim Rourke | UK Head of P&C Pricing, Product, Claims and Underwriting at WTW.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “Motorists are facing the sharpest acceleration in premium rates, as insurers continue to grapple with a cocktail of rising costs. High levels of claims inflation are being driven primarily by the sharp rise in used car prices, amplified by rising vehicle theft, spare part delays, longer repair times and higher wages, all pushing costs above premium income and forcing insurers to play catch up by increasing prices.”
| 2022 Q2 | 2023 Q2 | |
|---|---|---|
| Average Premium* | £554 | £776 |
| % Change in Quarter* | +1% | +18% |
| £ Change in Quarter* | +£4 | +£119 |
| % Change Annually* | +6% | +40% |
| £ Change Annually* | +£32 | +£222 |
All regions across the UK recorded soaring double-digit price rises in insurance premiums over the last 12 months, ranging from 35% for drivers in Central and North Wales, taking their annual premiums to £523, to the largest annual percentage increase of 45% recorded in Central Scotland where average premiums now cost £691.
The South West of England continues to be the cheapest region for car insurance, with average premiums now costing £509. Inner London remains the most expensive region, where prices are now on average £1257 having increased in the last 12 months by 43% (£375). Meanwhile, the average cost of car insurance in Outer London has for the first time exceeded £1000, where drivers now pay an average bill of £1003.
Manchester / Merseyside (£965) and the West Midlands (£940) remain the most expensive areas outside of the capital, after recording increases of 38% and 43% respectively during the last 12 months.
| 2022 Q2 | 2023 Q2 | |
|---|---|---|
| Inner London | £882 | £1257 |
| Outer London | £704 | £1003 |
| Manchester / Merseyside | £701 | £965 |
| West Midlands | £659 | £940 |
| Leeds / Sheffield | £639 | £880 |
More locally focused data shows motorists in Kilmarnock experienced the sharpest annual rises of 47% taking their average premiums to £613[1]. Kirkwall, the capital of the Orkney Islands, is the least expensive town in the UK with prices on average now costing £461.
Drivers aged 17-20 took the largest hit of any age group. Male drivers in this age bracket experienced an annual percentage increase of 60% (£903) taking their premiums to £2414, with prices not seen at this level since 2012. Female drivers from the same age group saw their premiums surge by 61% (£652) during the last 12 months to a record £1728.
Steve Dukes, CEO at Confused.com comments: "Consumers are facing rising costs across the board, and car insurance is no exception. But the price increases we're seeing are so significant that it's going to cause real financial impact to many people. We know that there's a lot of factors going into this, with inflation pushing up the cost of claims for insurers.
“But as an industry we have to help drivers understand where they can save money when it comes to renewing their policies. We know a lot of drivers are shopping around and switching, so now is the time for insurers to be as competitive as they can be. Doing so means there's a higher chance of winning new business, but also helping drivers by not adding to the already strained financial pressures many are facing."
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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