’Motorists are facing the sharpest acceleration in premium rates,’ says UK head of P&C pricing 

Car insurance premiums rose by a record-breaking 18% (£119) in Q2 2023, the latest Car Insurance Price Index from Confused.com and Willis Towers Watson (WTW) has revealed.

In a statement released yesterday (19 July 2023), the firms revealed that the previous fastest quarterly rise recorded by the index was in the second quarter of 2010, when prices rose by 12%.

Looking at the last 12 months, the index showed that comprehensive car insurance premiums had risen by 40% – equating to £222 – with motorists now paying £776 on average.

At 40%, WTW highlighted that the annual rise in costs “continues to outstrip CPI (consumer price index) inflation”, which sat at 8.7% in May.

“Motorists are facing the sharpest acceleration in premium rates, as insurers continue to grapple with a cocktail of rising costs,” said Tim Rourke, UK head of property and casualty (P&C) pricing, product, claims and underwriting at WTW.

“High levels of claims inflation are being driven primarily by the sharp rise in used car prices, amplified by rising vehicle theft, spare part delays, longer repair times and higher wages, all pushing costs above premium income and forcing insurers to play catch up by increasing prices.”

Time to compete

Motorists aged 17 to 20 took the largest hit – male drivers in that cohort experienced a percentage increase of 60% during the last 12 months, taking their premiums up to £2,414.

Female drivers in the same age group, meanwhile, saw premiums surge by 61% to a record £1,728.

Considering location, all regions across the UK recorded double-digit price rises in insurance premiums over the last year.

The largest annual percentage increase recorded was in central Scotland at 45%, with cover now costing consumers around £691 on average per year.

And in outer London, premiums exceeded £1,000 for the first time.

On the other end of the scale, the least expensive town in the UK in terms of average premiums is Kirkwall, where cover costs £461 on average.

Steve Dukes, chief executive at Confused.com, said the “price increases we are seeing are so significant that it’s going to cause real financial impact to many people”.

“As an industry we have to help drivers understand where they can save money when it comes to renewing their policies,” he added.

“We know a lot of drivers are shopping around and switching, so now is the time for insurers to be as competitive as they can be.

“Doing so means there’s a higher chance of winning new business, but also helping drivers by not adding to the already strained financial pressures many are facing.”

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