Car insurance premiums rise for first time in two years

Comprehensive car insurance premiums have risen by an average of 1% – equivalent to £8 – over the past three months, according to new data from Confused.com and WTW.

The rise, while modest, marks the first time since December 2023 that motor policyholders have seen a quarter-on-quarter increase in the cost of their cover, with average quoted yearly premiums now standing at £719.

Despite the quarterly rise, premiums are down 5% over the first half of 2026, continuing the long-standing softening trend that has seen them steadily decline from a peak of £995.

The only UK region to report a price fall over the period was inner London, which saw premiums drop by 0.4% to £1,088.

According to Tim Rourke, EMEA property and casualty leader for insurance consulting and technology at WTW, the market “may be approaching an inflection point” after a “prolonged period of price reductions”.

“Insurers continue to face repair cost inflation driven by vehicle complexity and supply chain disruption, as well as continued pressure from credit hire costs. If these cost trends persist, market profitability will come under even greater strain without premium increases over the remainder of 2026,” he added.

Critical moment

Steve Dukes, chief executive at Confused.com, said: “Prices have been increasing now for a few months and drivers could soon start to see this when they shop around or renew, which is when competitive pressure across the market will intensify.

“Claims payouts have increased since 2020, and that pressure isn’t easing anytime soon. This makes it a critical moment for insurers to maximise their data capabilities, to be more competitive, more responsive and better placed to win customers who are actively seeking value.

”The insurers who have invested seriously in data will be the ones who come out ahead.”