Car insurance premiums fall to lowest level in more than five years

Comprehensive car insurance premiums have fallen by 12% (£71) since Q2 2020, with UK motorists now paying £522 on average, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.

This is the second biggest annual drop since 2014 and prices have now fallen for three consecutive quarters.

Premiums are now the cheapest they have been since early 2016, after falling by 3% (£16) in Q2 2021, according to results from the index, a car insurance price index based on price data compiled from almost six million customer quotes per quarter.

Graham Wright, UK lead of property and casualty personal lines pricing at Willis Towers Watson, commented: “Fewer claims during successive Covid-19 lockdowns have sustained the current downward trend for premiums across the board, with insurers continuing to pass on savings to customers.”

“However, with more cars expected to return to the road when lockdown rules are eased further from 19 July, the increase in miles driven risks pushing premiums in the opposite direction towards pre-pandemic prices.”

From April to June 2021, the cost of comprehensive car insurance has been on a downward trend across every region in the UK, except for Northern Ireland, which saw a 1% rise in premiums.

Drivers in the Inner London and the Manchester/Merseyside regions benefited from the greatest quarterly drop in prices, with their insurance premiums decreasing on average by 5% to £808 and £675, respectively.

More locally focused data shows that drivers in the City of London and West London benefited from the greatest quarterly fall of 8%, reducing the premiums of drivers in these areas to £722 and £721, respectively. The next biggest fall was seen in Perth, which experienced a 7% drop in prices, where drivers were paying an average of £331 in the last three months.

Despite a 6% drop in prices, West Central London remains the most expensive place in the UK to buy car insurance, with drivers now paying on average £981. At the other end of the scale, the cheapest town is now Llandrindod Wells in Wales, where drivers were paying an average of £319 in Q2 2021 for comprehensive car insurance.

Female drivers aged 71 or over benefited from the greatest price fall, compared to other age groups, seeing a 4% quarterly price decrease, taking their annual premiums to £331.

Meanwhile, female drivers aged between 17 and 20 and male drivers aged between 66 and 70 experienced the smallest drop in prices of 2%, with annual premiums decreasing from £1,062 to £1,041 for females aged 17 to 20 and from £339 to £333 for males aged 66 to 70.

Wright said: “Even without the pandemic, the regulatory reforms sweeping across the sector, including the FCA’s ban on general insurance price walking and Ministry of Justice whiplash reforms, are creating simultaneous pressure for prices to both rise and fall respectively. With so many challenges in play at the same time, the personal lines industry is braced for one of the most turbulent times in its history.”

Louise O’Shea, chief executive officer at Confused.com, commented: “The turbulence of the last 18 months has been a key factor in how driving behaviours have changed, which is reflected in the cost of car insurance now. How long this will last will be hard to tell. With the easing of restrictions, the number of motorists on the road is likely to rise and this will undoubtedly be reflected in the price of insurance premiums.

“Between the upcoming FCA changes, which will spell out a period of uncertainty within the industry, and the price of fuel skyrocketing, among other motoring costs, it’s never been more prevalent a time for motorists to shop around.”

Mark Dugdale