Average price paid for motor insurance up by 2% in the first quarter of this year to £478, as insurers facing above inflation cost increases. Insurers doing all they can to offer competitive deals as cost pressures continue
According to the latest Motor Insurance Premium Tracker, in the first quarter of this year:
- The overall average premium paid for private comprehensive motor insurance was £478 up 2% on the previous quarter. The current average premium is 16% higher compared to Q1 2022, and is at its highest since Q4 2019, when it was £483.
- The average price paid by motorists renewing their cover rose by £8 to £436 while the average premium for a new policy was up £14 to £545.
The rise reflects above inflation cost pressures motor insurers continue to face, such as higher raw material costs for vehicle repairs.
The FCA rules on the pricing of motor and home insurance introduced on 1 January 2022 ensure that the price paid by renewing customers for motor and home insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as insurer, broker, or price comparison website.
However, the rules do not set or cap the level of premium paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims. For more information read our insurance pricing FAQs.
Rising cost pressures continue to hit premiums.
Examples of increasing cost pressures cited by some ABI members include:
- Energy inflation adding to each repair.
- Average paint and material costs have increased by nearly 16%.
- Courtesy car costs to repairers are increasing at around 30%.
- In addition, the average price of second-hand cars has jumped by 30% in three years (source: Auto Trader).
Jonathan-Fong, the ABI's senior policy adviser, motor insurance, said:
"With households battling the rising cost of living, the last thing anyone wants is a higher motor insurance bill. Naturally, every motorist wants the best insurance deal, and insurers are doing all they can to keep motor insurance as competitively priced as possible. Yet, like many other sectors, insurers continue to face higher costs. The price of certain raw materials and energy costs are rising at rates well above general inflation, and these costs are becoming increasingly challenging to absorb."