Average motor insurance costs saw largest recorded year-on-year jump – Consumer Intelligence

The average cost of the most competitive motor insurance policies has increased by 21.1% in the past year – the largest annual increase recorded by market research firm Consumer Intelligence since it began collecting data nearly 10 years ago.

The firm’s latest motor insurance price index, published today (29 March 2023), revealed that consumers’ annual motor insurance bills rose to an average of £929.

Overall, the firm’s data revealed that average motor premiums had increased by 41% since it started tracking prices in October 2013. 

Consumer Intelligence said the upswing in prices was the result of multiple factors – including inflation in motor supply chains, the shortage of cars and the FCA’s regulation on dual pricing.

Ian Hughes, chief executive at Consumer Intelligence, said the regulator’s implementation of the general insurance pricing practices (GIPP) rules had “compounded with consumers reducing [their] level of cover” to “save money during these desperate times”.

He added that these factors represented “a perfect storm for insurers”.

“During the last three months alone, premiums have soared 6.7% – that’s the second largest quarterly increase we’ve ever witnessed,” Hughes explained.

Data breakdown

Considering age, the average cost of premiums decreased by 20.1% for under 25s. Over 50s, on the other hand, saw an increase of 80.4%.

Despite the drop in cost, under 25s continued to pay the most for insurance at an average of £1,917, whereas those aged over 50 paid an annual average of £462.

Currently, 72% of the five cheapest insurance quotes for under 25s are from telematics providers – compared to 12% for the over 50s.

Telematics policies base premium prices on a consumer’s driving behaviour by tracking driving and rewarding safer vehicle use, among other things.

In terms of location, prices rose across the board – in London, drivers paid the highest premiums at £1,419. Consumers in the south west, however, paid the lowest at £576.

Drivers in London and the east midlands experienced the fastest rise in motor premiums at 26.4% and 26.3% respectively, while the north east saw the smallest increase of 12.1%.

Consumer Intelligence calculated the average cheapest premiums by comparing the prices offered to 3,600 people by all major price comparison websites and direct insurers.

The best five prices for each consumer were compared to the previous month’s top five – these variations were then averaged to produce the index.