Telematics products, meanwhile, have fallen in popularity as insurers plot their new pricing strategies

The average motor insurance premium increased by 7.8% over the first five months of 2022, with the typical policy now costing £786 according to the latest motor insurance price index published by Consumer Intelligence today (8 July 2022).

The insight firm said that – since prices shot up in January after the regulator introduced new rules to tackle price walking – premiums now appear to be on a more unpredictable path as insurers plot their new pricing strategies.

Insurance insights manager at Consumer Intelligence Mike Miskelly said: “Whilst we continue to see varied strategies at a brand level, we are starting to see signs of inflation taking hold with a further uptick in premiums for new business customers.

“As we predicted earlier this year, this was inevitable considering the enormous upward pressure from claims costs and repairs.

“It was only a matter of time until we saw this come through at a market level.”

Miskelly further noted that the market, as a result, is behaving in “two very different ways”, with prices going up for new business customers and down for those renewing.

He continued: “Making a claim, moving house, buying a new car or mid-term adjustments could be the deciding factor in which side of the coin a customer will fall.

“Customers forced back out into the new business market right now may feel frustrated by the quotes they get.”

Trending upwards

Longer term, average overall premiums have increased 20.3% since October 2013.

Average premiums, however, are 8% lower than pre-Covid levels and 12.4% lower than their pricing peak back in September 2017.

Older drivers continue to be stung by higher car insurance premiums, while prices have also risen for motorists aged 25 to 49.

Popularity in telematics products, meanwhile, have dropped by 3%, with 27% of the five cheapest insurance quotes now coming from telematic firms – down from a record high of 30% in January 2022.

“We’re seeing an influx of ‘essentials’ products in the market right now,” added Miskelly.

“On the whole, these products are stripped back, cheaper versions of existing products, which are competing with telematics products for the top spots on [price comparison websites].

“In some cases, essentials products actually provide less value than a telematics products, but the minimal price differentiation and hassle of installing a ‘black box’ could be deterring people from choosing telematics over a traditional policy,” he said.