LONDON, January 16, 2024 — Comprehensive car insurance premiums have increased sharply by 58% (£366) during the last 12 months, with UK motorists now paying £995 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 risen for nine straight quarters since the last three months of 2021, and recorded an average price rise of 8% (£71) in the final quarter of 2023, 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.
| 2022 Q4 | 2023 Q4 | |
|---|---|---|
| Average Premium* | £629 | £995 |
| % Change in Quarter* | +7% | +8% |
| £ Change in Quarter* | +£43 | +£71 |
| % Change Annually* | +19% | +58% |
| £ Change Annually* | +£100 | +£366 |
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “The cost of car insurance spiralled in 2023 primarily due to the soaring price of used cars, although there is evidence of a market readjustment with values having slipped for the last four months.
“Insurers have also had to pass on the rising cost of spare parts and materials, more expensive repairs as cars become more sophisticated, labour shortages, extended vehicle loan times and a spike in personal injury claims.”
All regions across the UK recorded exceptional price rises of over 50% in insurance premiums over the last 12 months. Drivers in Central Scotland saw the largest percentage increase in the cost of comprehensive car insurance, where drivers saw an annual rise of 64% with average premiums now costing £897. The smallest annual increase was seen in Central and North Wales, where drivers still saw a significant annual rise of 51%, with average premiums now costing £652.
The South West of England continues to be the cheapest region for car insurance, with average premiums now costing £636. Inner London remains the most expensive region, where prices are now on average £1607 having increased in the last 12 months by 59% (£599). Manchester / Merseyside (£1233) and the West Midlands (£1224) remain the most expensive areas outside of the capital.
| 2022 Q4 | 2023 Q4 | |
|---|---|---|
| Inner London | £1008 | £1607 |
| Outer London | £808 | £1291 |
| Manchester / Merseyside | £790 | £1233 |
| West Midlands | £755 | £1224 |
| Leeds / Sheffield | £715 | £1127 |
More locally focused data shows motorists in Edinburgh and Glasgow experienced the sharpest annual rises of 65% taking their average premiums to £806 and £998 respectively. West Central London continues to be the most expensive postcode in the country where drivers now pay an average bill of £1936 while Llandrindod Wells in Wales remains the cheapest town in the UK with prices on average now costing £584[1].
Drivers aged 17-20 took the largest hit of any age group, with those aged 17 seeing the sharpest annual rise as prices jumped by £1423 (98%) compared to a year ago and are now on average paying £2877.
“The sharp rise in average car insurance premiums masks an even more dramatic rise in premiums for electric vehicles,”
Tim Rourke | UK Head of P&C Pricing, Product, Claims and Underwriting
Tim Rourke said: “The sharp rise in average car insurance premiums masks an even more dramatic rise in premiums for electric vehicles. Insurers face unique challenges in covering EVs with advanced technology requiring specialist knowledge and longer repair times.
“As UK carmakers ramp up their sales of EVs to meet mandatory targets, third-party claims involving EVs will also gather pace. Faced with this extra challenge, insurers will be keen to see if further advancements in technology and the continued decline in EV new vehicle costs lead to reduced frequency and costs, offsetting some of the repair-side pressures.”
Steve Dukes, CEO at Confused.com comments: "UK motorists won't be surprised by news of record car insurance price rises, but they will be disappointed. The crumb of comfort will be that increases are somewhat smaller than in previous quarters, so many will be hoping this is a sign of a more stable period ahead.
“In addition to the average price rises, we have seen different customer groups affected to increasingly different degrees. Understanding and reacting to this has become increasingly important to insurance providers looking to make more informed pricing decisions."
“With things as volatile as they are, there’s a real need within the industry for more insight and sharing what we know. This can only benefit both businesses and customers as insurers make better, more informed decisions when it comes to pricing to try and stabilise the market even further.”
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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