UK car insurance premiums see 5% annual increase

Comprehensive car insurance premiums increased by 4 percent (£32) in the final quarter of 2019, with UK motorists now paying £815 on average, some £41 more than they were paying this time last year, according to the latest Car Insurance Price Index produced by price comparison site Confused.com in association with Willis Towers Watson.

According to the index, which is based on price data compiled from almost six million customer quotes per quarter, the final quarter recorded the second significant price increase in 2019, following the 3 percent rise in Q2 2019, and brings the average premium closer to the price peak of £858 in 2011.

Graham Wright, UK lead of P&C personal lines pricing at Willis Towers Watson, said: “This is the fifth quarter in a row where prices have swung between increases and decreases, showing the market’s ongoing uncertainty around pricing. This uncertainty has been fuelled by many elements, including timing challenges with the Civil Liability Bill implementation. That said, the increases have tended to outweigh the decreases and the recent challenging environment for 1/1 reinsurance renewals on motor excess-of-loss will have done nothing to help insurers keep costs under control.”

The cost of comprehensive car insurance over the last 12 months increased across all regions in the UK, with drivers in Inner London being hit with the biggest annual rise of 8 percent (£91) in their average premiums from £1169 to £1260. The smallest annual increase of 1 percent was seen in the Scottish Borders, increasing average annual premiums to £615, while the South West is now the cheapest region for car insurance, which on average costs just £595.

West Midlands joins Manchester/Merseyside as the only regions outside of the capital where insurance prices exceed £1,000, with average premiums now costing £1011 and £1053 respectively.

More locally focused data shows motorists in West Central London experienced the greatest annual increase in prices at 14 percent, increasing their premiums to £1371, while London East is the most expensive postcode area for motor insurance in the UK, where drivers now pay an average of £1443. The cheapest town is now Dorchester, where drivers were paying an average of £550 at the end of 2019 for comprehensive car insurance.

The demographic that saw the greatest annual rise were female drivers aged between 26 and 30, who saw a 9 percent price increase taking their premiums from £755 to £823. Male drivers aged between 17 and 20 are still paying the most of any demographic - with premiums increasing by 6 percent - and now pay on average £2369 compared to £2230 one year ago.

Graham Wright noted: “Many of the challenges observed throughout 2019 will persist in 2020, as cost pressures remain from expensive vehicle repairs, theft claims, last summer’s discount rate change, Brexit-related uncertainty and IPT increases.”

Steve Fletcher, head of data services at Confused.com said: “We are seeing the biggest annual increase in car insurance premiums in two years, and steepest quarterly rise since June 2017. And the scale of these increases shouldn’t be understated.

“The past 18 months have been very volatile, with prices fluctuating before delivering a powerful blow to end the year. And this is a pattern we have seen before, which resulted in premiums increasing a further £100, on average. If we see a repeat of this cycle, then we can anticipate prices to exceed £900 in the next 18 months and reach the highest on record. With the current economic uncertainty surrounding the UK, we shouldn’t hope to see an easing of insurance premiums in 2020.”