Comprehensive car insurance premiums have increased by a record 40% (£222) throughout the last 12 months, with UK motorists now estimated to be paying £776 on average.
According to the latest Confused.com Car Insurance Price Index in association with global broking firm WTW, car insurance premiums are at the highest ever recorded levels since the two companies launched their car insurance price index in 2006. Data shows that the last peak took place 12 years ago in the second quarter of 2011 when the average premium was £663.
At 40%, the annual rise in motor insurance costs continues to outstrip CPI inflation, held at 8.7% in May.
Moreover, car insurance premiums have also increased for seven straight quarters following a price rise of 18% (£119) in the second quarter of 2023. Based on price data compiled from over six million customer quotes per quarter, this is the largest quarterly increase on record and by a significant margin.
The previous fastest quarterly rise was set in the second quarter of 2010, 13 years ago, when prices increased by 12%.
“Motorists are facing the sharpest acceleration in premium rates, as insurers continue to grapple with a cocktail of rising costs. High levels of claims inflation are being driven primarily by the sharp rise in used car prices, amplified by rising vehicle theft, spare part delays, longer repair times and higher wages, all pushing costs above premium income and forcing insurers to play catch up by increasing prices,” said Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW.
Elsewhere, data shows that all regions across the UK recorded soaring double-digit price rises in insurance premiums over the last 12 months. This ranged from 35% for drivers in Central and North Wales taking their annual premiums to £523, to the largest annual percentage increase of 45% recorded in Central Scotland where average premiums now cost £691.
It is worth noting that the South West of England continues to be the cheapest region for car insurance, with average premiums now costing £509, while, at the same time, Inner London remains the most expensive region, where prices are now on average £1257 having increased in the last 12 months by 43% (£375).
Another key figure is that the average cost of car insurance in Outer London has for the first time exceeded £1000, where drivers are now paying an average bill of £1003.
Meanwhile. Manchester/Merseyside (£965) and the West Midlands (£940) remain the most expensive areas outside of London, after recording increases of 38% and 43% respectively during the last 12 months.
More locally focused data from the index also shows that motorists in Kilmarnock experienced the sharpest annual rises of 47% taking their average premiums to £613. Kirkwall, the capital of the Orkney Islands, is the least expensive town in the UK with prices on average now costing £461.
Another noteworthy figure is that drivers aged 17-20 took the largest hit of any age group, with male drivers in this age bracket experiencing an annual percentage increase of 60% (£903) taking their premiums to £2414, with prices not seen at this level since 2012.
Female drivers from the same age group saw their premiums surge by 61% (£652) during the last 12 months to a record £1728.
Steve Dukes, CEO at Confused.com, said: “Consumers are facing rising costs across the board, and car insurance is no exception. But the price increases we’re seeing are so significant that it’s going to cause real financial impact to many people. We know that there’s a lot of factors going into this, with inflation pushing up the cost of claims for insurers.
“But as an industry we have to help drivers understand where they can save money when it comes to renewing their policies. We know a lot of drivers are shopping around and switching, so now is the time for insurers to be as competitive as they can be. Doing so means there’s a higher chance of winning new business, but also helping drivers by not adding to the already strained financial pressures many are facing.”
