- Average quoted cost of car insurance hits £929 with Londoners quoted the most at £1,419 and motorists in the South West the lowest at £576
- Demand for telematics surges making up a third of the cheapest insurance quotes as motorists look to reduce costs
The average cost of the most competitive motor insurance deals has soared a record 21.1% in the past year taking annual bills to £929, the latest motor insurance price index published by Consumer Intelligence shows1.
A “perfect storm” of the shortage of new and used cars plus the impact of inflation on car parts, repairs and servicing and action by regulators to ban dual pricing has ramped up prices, Consumer Intelligence says.
The shortage of cars has pushed up the cost of replacing vehicles involved in claims while rising costs for parts, repairs and servicing has added to the pricing pressures.
The Financial Conduct Authority’s General Insurance Pricing Practices (GIPP) rules introduced in January 2022 which banned insurers from offering different premiums to new and existing customers have also had an impact.
“This is the largest yearly increase we’ve seen since we started tracking quoted premiums in October 2013 and during the last three months alone premiums have soared 6.7%. That’s the second largest quarterly increase we’ve ever witnessed as well,” says Ian Hughes, CEO of Consumer Intelligence.
“This is a perfect storm for insurers. A year on from the GIPP rules being introduced which was intended to cause a dramatic shift in consumer behaviour has compounded with consumers reducing the level of cover they are purchasing from their insurer to save money during these desperate times,” he adds.
Drivers in London pay the highest quoted premiums at £1,419 while those in the South West where quoted the lowest at £576. Prices are rising fastest in the East Midlands and London at 26.4% and 26.3% respectively while the North East saw the lowest price rises at 12.1%
The rise in quotes across the board is boosting demand for telematics products which reward safer drivers with lower premiums. They now make up a record 33% - the highest level since Consumer Intelligence first started tracking - of the cheapest insurance quotes for a typical motorist and 72% of the most competitive deals for under-25s.
Average overall quotes have increased 41% since October 2013 when Consumer Intelligence first started collecting data.
However, costs are down 20.1% over the period for the under-25s while they have increased 80.4% for the over-50s and 54% for those aged between 25 and 49.
Age differences in the past year
The under-25s – who are statistically more likely to have an accident – have seen smaller wuoted prices increases in the past year at 17.9% but they continue to be quoted the most for insurance at £1,917.
Quoted price rises for the over-50s and motorists aged between 25 and 49 were virtually the same with premiums for the over-50s up 22.5% and 22.1% for the over-25s. However, the over-50s pay average annual premiums of £462 compared with £700 for the over-25s.
The number of telematics products that make up the five cheapest insurance quotes for a typical motorist has continued to grow, hitting a record 33% - the highest level since Consumer Intelligence began tracking in 2013.
The growth in telematics competitiveness has been driven by telematics providers who are increasingly squeezing traditional insurers out of the competition for the business of under-25s who rely on telematics to get reasonably priced car insurance if they drive sensibly.
Telematics policies base premiums on how you drive, with insurance becoming cheaper for safer drivers. Currently 72% of the five cheapest insurance quotes for under-25s are from telematics providers compared with 25% for the 25 to 49 age group and just 12% for the over-50s.
Drivers in the East Midlands and London are experiencing the fastest rises in motor premiums at 26.4% and 26.3% respectively but no regions escaped price rises. The North East saw the lowest increase but annual bills are still 12.1% higher.
Londoners continue to pay the most for motor insurance at £1,419 followed by the North West at £1,248. The cheapest region for motor insurance is the South West at £576.
(Feb 22 to Feb 23)
Average Quoted Premium
|Yorkshire & The Humber||+17.8%||£692|
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