Highest car insurance prices since end of 2020 with more cars on the road

Drivers are paying more for their car insurance compared to the previous year for the first time in 18 months, according to new data.

The average cost of car insurance in the UK is now £12 (2 per cent) more expensive compared to this time last year, with drivers now paying £550.

That’s according to the latest car insurance price index (Q1 2022) from Confused.com, powered by WTW.

Based on six million quotes in a quarter, it’s the most comprehensive car insurance price index in the UK.

This is the highest prices have been since the end of 2020, having increased by £21 (4 per cent) in the past three months alone.

While this may come as bad news to drivers, further research by Confused.com shows that loyal drivers could be paying more by choosing to stick with their renewal price.

A survey of 2,000 UK drivers found that more than two in five (42 per cent) of those who received their renewal in the past quarter (Q1 2022) saw their price increase year-on-year, by £39 on average.

And, given that the cost of a new policy through Confused.com increased by just £12 in comparison throughout the same period, drivers could have saved money by shopping around, despite the rising prices.

In fact, more than a quarter (26 per cent) of those who saw their price increase shopped around and switched insurers, saving £59, on average.

This is the first analysis of car insurance prices by Confused.com since the introduction of pricing changes enforced by the Financial Conduct Authority (FCA), which has put a stop to insurers pricing new and renewing customers differently.

Under the new regulations, insurers must offer drivers the same price they would receive as a new customer buying in the same way, banning what was previously known as a new customer discount.

Following these changes, one in five (19 per cent) drivers who received their renewal in the past three months wrongly believed that their renewal wouldn’t increase, with a further one in five (21 per cent) expecting their renewal price to be cheaper.

However, Louise O’Shea, CEO at Confused.com, reminded drivers that the recent FCA changes do not guarantee them a cheaper or flat renewal price, as any increases in the average cost of car insurance across the UK will also be reflected in renewal premiums.

And according to Confused.com, prices have been creeping up for the past six months, with drivers today paying £36 more than those who bought a new policy six months ago, on average.

This suggests that the Financial Conduct Authority changes may not be the driving force behind price increases.

Since the easing of lockdown restrictions, the number of cars on the road has increased.

And with more cars on the road, the more claims drivers are likely to make.

This in turn means insurers must raise their prices to reflect the amount of money they are paying out for claims.

And with the typical cost of pay-outs increasing, their prices will too.

While prices are increasing for most of the UK, there are also some drivers who will see a cheaper price when they shop around, with younger drivers on the receiving end of this good news.

In particular, 17-year-olds are now paying a staggering £83 (7 per cent) less compared to drivers of the same age 12 months ago.

This brings the average premium for these first-time drivers to £1,166 – the lowest price on record.