The latest data from the Association of British Insurers (ABI) comes after Confused.com revealed prices dropped slightly in the first quarter of this year. The comparison site found premiums are now £54 cheaper on average than at the end of 2023.
Despite the apparent good news, prices are still much higher than 12 months ago.
Here, we delve into the cost of car insurance and explain how to pay less.
What's happening to car insurance prices?
The ABI's latest figures show the average car insurance premium now sits at £635, up 1% from £627 in the final three months of 2023. The rise is significantly less than the 12% jump seen between the third and fourth quarter last year.
That said, the cost of cover is still far higher than 12 months ago. It is now 33% more expensive to buy a policy than at the beginning of 2023, when the average price of car insurance was £478.
The ABI releases the most comprehensive data on car insurance pricing, on a quarterly basis, as it's based on the price paid by drivers. It also reflects the premiums paid by all customers (both those renewing and those shopping around).
The chart shows how the average cost of a car insurance premium has risen since January 2022:
The ABI isn't the only industry group with an index showing how prices have changed. Comparison sites publish data as well, but their figures only reflect quotes given to customers searching for car insurance.
The latest report from Confused.com showed motorists paid 43% more for car insurance in the first three months of 2024 compared to last year. The average cost of taking out a new policy in the UK is now £941 – an increase of £284 in the past 12 months.
Meanwhile, figures from insurance price experts Consumer Intelligence – also based on quotes – revealed the average quoted price of car insurance jumped by 56.4% in the year to February 2024.
Both indices found signs of a slowdown, however. Data from Confused.com showed that premiums in the first quarter of this year were £54 cheaper on average than at the end of 2023.
The annual rise recorded by Consumer Intelligence is lower than the 67.2% increase seen in the year to the end of November.
Some drivers paying far above the average
Customers who choose to pay monthly are likely to be paying even higher prices, thanks to sky-high interest rates.
Drivers who choose to spread payments tend to be younger and/or less wealthy, leading the Financial Conduct Authority's head of insurance to describe insurers' interest rates as 'a tax on being poor'.
Which? is pushing for insurers' interest rates to be compared in a league table and for the regulator to take action against those not providing fair value.
Find out more:Why is the cost of car insurance so high?
The rate of CPI inflation might have dropped dramatically from its peak of 11.1% in October 2022 to 3.2% in March 2024, but soaring repair costs have been largely blamed for premium price rises.
ABI figures show that the cost of repairs jumped 32% in the third quarter of 2023. Other cost pressures reported by insurers during the same period include longer repair times – this drove up the cost of providing replacement vehicles by 47%.
The cost to replace written-off vehicles has also increased, as the average price of new cars has risen 43% over five years.
The ABI points to technological advancements in new vehicles for why the cost of repairs and replacements are on the up. Electric vehicles, in particular, require more specialist expertise to repair and take longer to fix.
All of these pressures mean insurers are spending more on claims and costs than they are collecting in premiums.
Find out more:What impacts premium prices?
Location and age have an impact on premium prices.
r, according to Confused.The comparison site also found yThe cost of car insurance for young drivers has shot up by £644 on average in the past year, the Young Drivers Report from Compare the Market has found. The comparison site revealed that, as a result of this rise, the total annual cost of running a car is now £3,043 on average for a young driver.
How much could you save by switching?
Confused says loyal customers are facing some of the biggest price increases to their premiums. According to its survey of 2,000 drivers, of those who received their renewal between January and March this year, 75% received a higher renewal price of £94 on average.
But you can potentially make big savings by shopping around for a better deal. The comparison site found almost half (45%) of customers that received a higher quote saved an average of £90 compared to last year, simply by switching provider.
Other ways to keep costs down
Here are a few other simple ways you can reduce the cost of car insurance:
Go annual:Renew early: Keep mileage down:Tweak your job title:Haggle:Find out more:Which? Limited is registered in England and Wales to 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative of the following: 1. Inspop.com Ltd for the introduction of non-investment motor, home, travel, pet, van and temporary insurance products (FRN 610689). Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd. 2. LifeSearch Partners Limited (FRN 656479), for the introduction of Pure Protection Contracts, who are authorised and regulated by the FCA to provide advice and arrange Pure Protection Contracts. LifeSearch Partners Ltd is registered in England and Wales to 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386. 3.Which? are an Introducer Appointer Representative of Optimise Media Limited (FRN 313408), for the introduction of HSBC Group, who are authorised and regulated by the Financial Conduct Authority to provide credit brokering activity. Optimise Media is registered in England and Wales to Exchange Street Buildings, 35-37 Exchange Street, Norwich, England, NR2 1DP and company number 04455319. We do not make, nor do we seek to make, any recommendations on financial products or services that are regulated by the FCA, as we’re not regulated or authorised by the FCA to advise you in this way. In some cases, however, we have included links to regulated brands or providers with whom we have a commercial relationship and, if you choose to, you can buy a product from our commercial partners. If you go ahead and buy a product using our link, we will receive a commission to help fund our not-for-profit mission and our campaigns work as a champion for the UK consumer.
source https://www.which.co.uk/news/article/whats-happening-to-car-insurance-premiums-arTnq0Z643Yh