Car insurance premiums in the UK have increased sharply by 58% in 2023 with UK motorists now paying £995 on average, according to the latest Confused.com Car Insurance Price Index in association with broker WTW.
The Index recorded a £366 year-on-year increase from the £629 recorded in 2022. Car insurance premiums have now risen for nine straight quarters since the last three months of 2021, and recorded an average price rise of 8% (£71) in the final quarter of 2023.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, commented: “The cost of car insurance spiralled in 2023 primarily due to the soaring price of used cars, although there is evidence of a market readjustment with values having slipped for the last four months.
“Insurers have also had to pass on the rising cost of spare parts and materials, more expensive repairs as cars become more sophisticated, labour shortages, extended vehicle loan times and a spike in personal injury claims.”
Based on price data compiled from over six million customer quotes per quarter, the Index revealed that all regions across the UK recorded exceptional price rises of over 50% in insurance premiums over the last 12 months.
Drivers in Central Scotland saw the largest percentage increase in the cost of comprehensive car insurance, where they saw an annual rise of 64% with average premiums now costing £897.
The smallest annual increase was seen in Central and North Wales, where drivers still saw a significant annual rise of 51%, with average premiums now costing £652.
With average premiums of £636, the South West of England continues to be the cheapest region for car insurance. Inner London remains the most expensive region, where prices are now on average £1607 having increased in the last 12 months by 59%.
In Manchester / Merseyside drivers’ premiums are at £1233 and the West Midlands at £1224; these areas remain the most expensive areas outside of the capital.
The Index also revealed that drivers between 17 and 20 years old took the largest hit of any age group. Those aged 17 saw the sharpest annual rise as prices jumped by £1423 (98%) compared to a year ago and are now on average paying £2877.
Rourke said: “The sharp rise in average car insurance premiums masks an even more dramatic rise in premiums for electric vehicles. Insurers face unique challenges in covering EVs with advanced technology requiring specialist knowledge and longer repair times.
“As UK carmakers ramp up their sales of EVs to meet mandatory targets, third-party claims involving EVs will also gather pace. Faced with this extra challenge, insurers will be keen to see if further advancements in technology and the continued decline in EV new vehicle costs lead to reduced frequency and costs, offsetting some of the repair-side pressures.”
Steve Dukes, CEO at Confused.com, added: “UK motorists won’t be surprised by news of record car insurance price rises, but they will be disappointed. The crumb of comfort will be that increases are somewhat smaller than in previous quarters, so many will be hoping this is a sign of a more stable period ahead.
“In addition to the average price rises, we have seen different customer groups affected to increasingly different degrees. Understanding and reacting to this has become increasingly important to insurance providers looking to make more informed pricing decisions.”
