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Car insurance prices at 3-year high following £100 increase

However, motorists renewing this past quarter report savings amid cost of living crisis

Published on 25th January 2023
  • The average cost of car insurance is now £629, which is just £34 (-5%) less than the most expensive price ever recorded by the Confused.com car insurance price index
  • Prices have increased by 19% in the past 12 months - the steepest annual increase reported since Q2 2016
  • Louise O’Shea, CEO at Confused.com, reminds drivers of renewal traps. That’s as further research(1) shows drivers are saving an average of £59 when shopping around compared to their renewal price
  • Premiums reach highest on record in some areas, with Central Scotland, East & North East Scotland and North Midlands bearing the brunt of the increases
  • How can I save money on my car insurance? Confused.com provides top tips for getting cheaper car insurance, as cost of living crisis continues to impact the UK

Motorists across the UK are now paying the highest price for their car insurance in 3 years. This is as the average premium soars by £100 (19%) in 12 months, new data reveals.

The average cost of car insurance now stands at £629, which is just £34 (-5%) less than the most expensive price recorded. That’s according to the latest Confused.com car insurance price index, powered by WTW. Based on more than 6 million quotes over the quarter, it’s the most comprehensive car insurance price index for new business in the UK.

The 19% increase drivers are facing is the most costs have increased year-on-year since midway through 2016. However, at that point, drivers were paying just £552, in comparison, on average.

This is the most expensive prices have been since before the coronavirus pandemic, where prices reached a peak of £630, on average, before plummeting the following quarter. Over the past 2 years, car insurance costs fell due to the fact that fewer drivers were on the road. This meant that a significantly reduced number of claims were made. However, this past 12 months has seen prices climb at a rapid rate to almost reach pre-Covid prices. In fact, in the past 3 months alone, premiums have risen by a staggering £43 (7%) in the steepest quarterly increase in more than 5 years.

It's possible that this is partially due to the fact that insurers had to readjust their pricing to reflect a return to normal driving habits. But this past 12 months has also seen a real shake up in the insurance industry. Last January, the Financial Conduct Authority (FCA) introduced new regulations(2) to prevent insurers from overpricing loyal customers. This meant that all prices offered had to be fair and purely based on a driver’s profile. With companies no longer able to inflate returning customer costs, insurers have also had to readjust their pricing to make up for this. But, as a result, new business prices are likely to have increased.

However, this has led many to believe that their renewal price is likely to be the best they can get, so they no longer have to shop around to save. Louise O’Shea, CEO at Confused.com urges drivers not to fall into this trap, as further research shows how drivers are still saving money, even if their renewal works out cheaper than the previous year. To investigate, Confused.com conducted a survey of 2,000 UK drivers(1) that had their renewal in the last quarter. And the results show that 1 in 2 (50%) found their renewal price had increased compared to the previous year, by £46, on average. Of these, 2 in 5 (40%) went on to shop around and switch insurers and save £55, on average. This goes to prove that shopping around could save money, even when prices appear to be increasing. However, 1 in 5 (20%) also found their renewal to be £38 cheaper, on average. Of these, more than 1 in 3 (34%) went on to shop around and switch insurers, saving £59 on average.

These savings are also being seen by customers, with significant savings being reported, even when renewal prices have been cheaper. For example, Mr Allen saw his premium drop from £306 to £285. But, by shopping around he was able to secure a new price of £248. However, in most cases, customers have seen their renewal increase significantly, with shopping around saving a staggering £240 for one customer. In this case, the insurer increased their renewal by £200 to £720. However, shopping around saw them reduce their premium to £480.

While all drivers are seeing price increases this quarter, they’re impacting drivers differently. For example, male drivers are now paying £672, which is a 19% increase year on year - in line with the UK average. In terms of monetary value, this equates to a £44 increase in 3 months, and £105 year-on-year. Meanwhile, female motorists are now paying £557, following a 19% increase year on year. This means prices are now £90 more expensive, on average(3).

Similarly, the rate at which prices have increased varies across the UK. And there are some regions that have been hit the hardest, with drivers in some areas paying the highest prices on record. This is the case in Central and East & North East Scotland, and the North Midlands. Drivers in Central Scotland are now paying £547, on average, for their car insurance, following a £100 (22%) rise in prices in the past 12 months. Meanwhile, drivers in East & North East Scotland, and the North Midlands are now paying £80 more than last year (21% and 16% respectively). This brings the average price paid to £456 and £578, respectively.

However, these aren’t the steepest increases across the UK. A 22% increase for drivers in Inner London means they’re now paying a whopping £183 more than this time last year. This brings the average premium in the region to £1,008 - with prices tipping over the £1,000 mark for the first time in over 5 years. Drivers in Northern Ireland are also now paying 22% more than last year’s premium, with prices increasing by £120 to £688, on average. Meanwhile, motorists in Outer London are paying £808, on average, following a £143 (22%) increase year-on-year.

On a more granular level, it’s perhaps no surprise that drivers in certain areas of London have seen the steepest increases. In fact, both West Central and East London have seen prices rise by more than £200 in the past 12 months. Similarly, the likes of South West and South East London, Romford and Croydon are among 19 postcode areas of the UK that have reached the highest premiums on record.

Outside of London, motorists in Bradford and Manchester are seeing the biggest change in their car insurance costs. Prices in these areas have increased by £125 (17%) and £124 (16%) respectively. This brings the average premium in Bradford to £879, and £883 in Manchester.

It’s a similar picture for drivers of different ages, with some facing major hikes in their insurance costs compared to others. Typically, younger drivers pay the most for their insurance, so it's no surprise that their increases are above £200 for some. Although, 18-year-olds have been hardest hit, as their premiums soar by a staggering £307 (22%) over the past 12 months. This puts the average premium for drivers this age at £1,715, making it the most expensive age for car insurance.

This isn’t the highest price recorded for drivers of this age. Recent increases, however, has made this the case for both 28 and 33 year olds. A £130 (17%) increase for drivers aged 28 puts the average premium at £912 - the most expensive price on record for this age. Similarly, 33-year-olds are now paying £786, following a £123 price increase, to make it a record-high for this age group.

These increases are significant. But much like any other cost increases people are facing in the current climate, it's also clear that there are savings to be made. Shopping around is likely to help drivers save against their renewal price, which is no doubt a welcome saving as the cost of living crisis continues. But there are also ways in which drivers can make changes to their policy in order to save money. This includes:

  • Paying annually instead of monthly - insurers often put an interest charge on monthly payments, so making a one-off payment avoids this
  • Being accurate with your mileage - choosing a lower mileage may in fact work out more expensive, as this could be seen as a less experienced driver. Similarly, if you're no longer travelling the UK every week, be sure to let your insurer know!
  • Enhancing car security - anything that reduces the risk of your car being stolen will reduce the risk of claim, and this should be reflected in your price.

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Louise O’Shea, CEO at Confused.com comments: “We are living through a financially difficult time. And like everything else, the cost of car insurance is increasing rapidly and this will hit us all hard. It’s times like this where it’s really important for the FCA to be calling out companies who are not supporting consumers. So it’s good to see the FCA's introduction of its new Consumer Duty, setting higher and clearer standards of consumer protection across financial services, which will require firms to put their customers' needs first.

But the important thing to remember is that car insurance is one expense where you can save some money. It might be tempting to look at your renewal and accept it, especially if it’s around the same price as last year. But it’s also likely that there’s another insurer out there that can offer you a better price - and the only way to know is to shop around. We’re so certain that there are cheaper options out there for you that we guarantee to beat your renewal, or give you the difference, plus £20(4)! That way, you'll actually make money!

It’s also important to remember that each year you could be in a position to update your policy so that you’re able to save some money. Our tips on how to get cheap car insurance outlines how to do this. For example, if you’re in a position to be able to then, paying annually for your policy should cost less. Or if you’re driving less, then updating your mileage could save you money too. However, only make changes that are accurate, otherwise you could invalidate your policy.”


Notes to editors

Media information
Confused.com press office:


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.