By: 29 March 2023
Motor insurance premiums reach record high

The average cost of the most competitive motor insurance deals has soared a record 21.1% in the past year, according to Consumer Intelligence.

This record increase, brought about by a “perfect storm” of car shortages, the impact of inflation on car parts, repairs and servicing, and the ban on dual pricing, has ramped up prices to the extent that the average annual bill is now £929.

Consumer Intelligence said the shortage of cars is pushing up the cost of replacing vehicles involved in claims while rising costs for parts, repairs and servicing have added to the pricing pressures.

The Financial Conduct Authority’s General Insurance Pricing Practices (GIPP) rules introduced in January 2022, which banned insurers from offering different premiums to new and existing customers, have also had an impact on pricing.

Ian Hughes, chief executive of Consumer Intelligence, commented: “This is the largest yearly increase we’ve seen since we started tracking premiums in October 2013 and during the last three months alone premiums have soared 6.7%. That’s the second largest quarterly increase we’ve ever witnessed as well.”

He added: “This is a perfect storm for insurers. A year on from the GIPP rules being introduced which was intended to cause a dramatic shift in consumer behaviour has compounded with consumers reducing the level of cover they are purchasing from their insurer to save money during these desperate times.”

While average overall premiums have increased 41% since October 2013, prices are down 20.1% over the same period for the under-25s.

The over-50s and those aged between 25 and 49 have, however, seen their premiums increase 80.4% and 54%, respectively.

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