Low claims levels of claims over the past year due to COVID lockdowns have resulted in a third consecutive quarter of falling car insurance premiums in the UK, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson (WTW).
The index found that comprehensive car insurance premiums have fallen by 12% (£71) since the second quarter of 2020, with UK motorists now paying £522 on average.
Premiums are now the cheapest they have been since early 2016, after falling by 3% (£16) in the second quarter of 2021.
“Fewer claims during successive COVID-19 lockdowns have sustained the current downward trend for premiums across the board, with insurers continuing to pass on savings to customers,” said Graham Wright, UK Lead of P&C Personal Lines Pricing at WTW.
“However, with more cars expected to return to the road when lockdown rules are eased further from 19 July, the increase in miles driven risks pushing premiums in the opposite direction towards pre-pandemic prices.”
From April to June 2021, the cost of comprehensive car insurance has been on a downward trend across every region in the UK, except for Northern Ireland which saw a 1% rise in premiums.
Despite a 6% drop in prices, West Central London remains the most expensive place in the UK to buy car insurance, with drivers now paying on average £981.
At the other end of the scale, the cheapest town is now Llandrindod Wells in Wales, where drivers were paying an average of £319 in the second quarter of 2021 for comprehensive car insurance.
“Even without the pandemic, the regulatory reforms sweeping across the sector, including the FCA’s ban on general insurance price walking and Ministry of Justice whiplash reforms, are creating simultaneous pressure for prices to both rise and fall respectively,” Wright continued. “With so many challenges in play at the same time, the personal lines industry is braced for one of the most turbulent times in its history.”
Louise O’Shea, CEO at Confused.com, also commented: “The turbulence of the last 18 months has been a key factor in how driving behaviours have changed, which is reflected in the cost of car insurance now. How long this will last will be hard to tell. With the easing of restrictions, the number of motorists on the road is likely to rise and this will undoubtedly be reflected in the price of insurance premiums.
“Between the upcoming FCA changes, which will spell out a period of uncertainty within the industry, and the price of fuel skyrocketing, among other motoring costs, it’s never been more prevalent a time for motorists to shop around.”