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Steepest increase in car insurance prices reported since COVID-19 crisis

The average cost of car insurance has reached its highest in almost 2 years amid the cost of living crisis

Published on 21st July 2022
  • Motorists in the UK are now paying £554 for their car insurance, on average, following a £32 (6%) increase year-on-year
  • Further research shows that almost half (45%) of drivers who received a renewal quote last quarter saw a price increase of £41, on average(1)
  • However, drivers who shopped around on a price comparison site saved £54, on average (1)
  • Louise O’Shea, CEO at Confused.com urges drivers to shop around ahead of time and to consider opting for annual payments, which could save drivers as much as 10% on their car insurance(3)
  • How to save money on your car insurance: Confused.com expert tips aim to help drivers save more on their insurance as the cost of living rapidly increases

Car insurance costs are at the highest in almost two years following the steepest increase in prices since before the COVID-19 pandemic (Q1 2020), new data reveals.

The average cost of car insurance now stands at £554, on average, with drivers seeing an increase of £32 (6%) compared to this time last year. That’s according to the latest car insurance price index (Q2 2022) from Confused.com, powered by WTW. Based on six million quotes a quarter, it’s the most comprehensive car insurance price index in the UK. According to the data, prices have been rising this year, having increased by £25 in the past 6 months.

However, while prices are increasing across the board, further research by Confused.com shows that loyal customers are taking the biggest blow, having seen their renewal increase more than the price of a new policy, on average. And with the cost of living on the rise, this could be worrying for drivers who are already feeling a financial hit elsewhere. A survey of 2,000 UK drivers(1) found that almost half (45%) of those who received their renewal last quarter saw their price increase by £41, on average. This is despite 1 in 10 (10%) drivers who have renewed their car insurance since January 2022 believing that prices wouldn’t increase after Financial Conduct Authority (FCA)(2) changes earlier this year. However, while prices are increasing for new policies too, the data shows that drivers could still save money by shopping around and taking out a new policy. In fact, those who shopped around after receiving a more expensive renewal price saved £54, on average, after using a price comparison website and switching insurers.

Louise O’Shea, CEO at Confused.com reminds drivers that the recent FCA changes do not always mean a cheaper or like-for-like renewal price, as any increase to the average UK car insurance costs will be reflected in renewal premiums. And it’s likely that prices will continue to increase as motorists spend more time on the road, meaning the likelihood of claims will increase too.

However, with the cost of living crisis worsening and further household bill hikes expected later in the year, drivers need to be savvier than ever. And when it comes to their car insurance, drivers should be shopping around, as it’s one expense that could guarantee a saving.

An option for drivers to save money on their insurance is by choosing for annual payments. While monthly direct debits may be the most convenient option, paying upfront for an annual cost could save drivers an extra 10% when taking out a new policy.(3)

With so much to consider when it comes to car insurance, it can be confusing for drivers to know which factors will produce the best savings. To help motorists understand where savings could be made, Confused.com has created 16 tips to get cheaper car insurance costs. And it could be as simple as making sure all of your details are correct when taking out insurance.

But while prices are increasing for most, how much so depends on the driver's age, where they live and their gender. For example, female drivers have seen their price increase less than men, with prices increasing £28 and £34 respectively in the last 12 months. This means women are now paying £492, on average, while men pay £591 in comparison(4).

Meanwhile, prices have increased for drivers in all UK regions in the past year. However, in the past 3 months, prices in some areas have in fact dropped. Drivers in the South of England are now paying £6 (-1%) less than those shopping around last quarter, while prices in the East Midlands fell by £5 (-1%) in the past 3 months.

However, year-on-year, some drivers have seen their price increase by as much as 12%, on average. In Northern Ireland, prices have increased by £64 (12%) year-on-year to £594, on average, while those in Inner London have seen the biggest monetary increase. Prices in the region are now £882, the highest price paid in all regions, following a £74 (9%) increase year-on-year.

It’s a similar picture across the age groups, with some motorists paying less now than 3 months ago. In particular, 32-year-olds have seen the biggest decline in prices over the last quarter, and are now paying £21 (-3%) less. This is despite prices increasing by £46 (7%) over the year. Motorists of this age are now paying £692, on average. Similarly, 19- and 30-year-olds have seen a drop in prices in 3 months, with premiums falling by £14 and £12 respectively, on average.

However, drivers in their early-20s have seen a significant shift in prices, with some paying almost £100 more compared to 12 months ago. In particular, 21-year-olds are paying £98 (9%) more year-on-year, with the average premium now an eye-watering £1,205. Meanwhile, 20-year-olds are paying £1,288 following a £92 (8%) increase over the 12 months. Although this isn’t the highest price paid, as 18-year-olds fork out a staggering £1,453, on average. In fact, according to the data, prices only fall below £1,000 for drivers over the age of 24.

While prices for some drivers are showing signs of dropping, there’s no ignoring the fact that the general cost-of-living is on the rise, and not everyone can be so lucky. This is why it's more important than ever to find savings where we can. Confused.com has launched a money saving hub to help people understand where they can save money on bills to balance out the price hikes.

Louise O'Shea, CEO at Confused.com comments: With millions stung by the current cost of living, it can be disheartening to see that car insurance prices are also on the rise. As the latest data shows, we're seeing the highest spike in prices since before the pandemic. With us all still adjusting to life after lockdown, it’s likely that this is due to the number of insurance claims being made increasing as we get back into some sort of routine. Unfortunately, this means that you might notice a price increase when renewing or shopping for your car insurance.

While prices are increasing, we know that car insurance is one area where you can still save money, which will help to balance out price hikes in other areas. It's clear from research that renewal prices are often more expensive, and it can be easy to accept a higher price if it doesn't look too bad given the expectation that everything is increasing at the moment. But please don't do this. You can pay less!

The car insurance market is very competitive right now, which is the perfect time to be savvy and shop around for a better deal. Taking some time to research the best available options can really pay off. We know there’s an insurer out there who can offer you a better price, which is why we guarantee to beat your renewal(5). And if we can't, we'll give you the difference, plus £20. So, if anything, you will make money!


Notes to editors

Media information
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For further information:

About Confused.com

Launched in 2002, Confused.com was the UK's first digital marketplace for car insurance and is one of the leading brands in the sector, generating over one million quotes per month. It has expanded its range of comparison products over the years to include home insurance, van insurance, motorcycle insurance, and car finance comparison, as well as a number of tools designed to save consumers money.

Confused.com is not a supplier, insurance company or broker. It provides an objective and unbiased 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.

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Confused.com car insurance price index

The most comprehensive analysis of car insurance premiums in the UK – compiled by motoring experts just for you! How much will you be paying?

About the index:

The index is compiled using anonymous data from all enquiries submitted on Confused.com. In line with the draft Office of Fair Trading (OFT) commitments on the use of competitor price data, the prices used for calculating the index are based on an average of the best five quotes received on Confused.com. The OFT closed on 1 April 2014 and the commitments are now governed by the Competition and Markets Authority (CMA).

About WTW:

WTW (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, WTW has 45,000 employees in more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.