More misery for motorists as car insurance increases by 56% in a year

The average quoted price of car insurance jumped by 56.4% in the year to February

The average quoted cost of car insurance has increased by 56.4% in the year leading up to February, according to an index.

In February, drivers were most commonly receiving quotes between £500 and £749, according to insights firm Consumer Intelligence. The recent yearly hike is less than the 67.2% leap recorded for the year until November, remarks the firm.

Despite this, it remains the third-largest annual jump noted by Consumer Intelligence since it began tracking this data in October 2012. Between November and February, quotations saw a marginal incline of 0.5% – amounting to the smallest quarterly rise since November of the previous year.

Certain UK regions, including Wales and parts of England such as North East, North West and Yorkshire and the Humber, witnessed a drop in quoted premiums over these months. Max Thompson, insurance insight manager at Consumer Intelligence comments on this trend: “The new year saw some major brands make competitive movements and reduce premiums.”

He adds, “However some of this was unwound in February indicating it may have been more of a tactical move than a long-term trend.” The research presents an average of the five lowest premiums generated on price comparison websites.

Researchers further highlight that telematics providers constituted 15% of the top five quotes, a decrease from 18% recorded in the quarter ending with November. Telematics policies utilise modern technology to assess an individual’s driving behaviour, allowing insurers to provide premiums that suit the driver’s habits more accurately.

According to Consumer Intelligence, among under-25s, only 36% of the top five car insurance quotes came from telematics providers – the lowest it has been since May 2016. The Association of British Insurers’ (ABI) manager of general insurance policy, Jonathan Fong said: “Insurers are aware of the financial challenges customers are facing and are determined to keep motor insurance as competitively priced as possible.”

He added: “Our motor premium tracker is the only collection based on the price customers pay for their policy, rather than quotes, and shows that the average motor premium increased by 25% last year to £543. This was largely driven by above inflation increases in the cost of repairs, thefts and replacement cars, which contributed to insurers paying out a record £9.9billion in claims for the same period an average of £1.13million per hour.”

“As an industry, we’re committed to supporting customers and finding ways to help tackle the cost of providing motor insurance. Our 10-point roadmap to combat the rising costs encourages greater collaboration with government and relevant stakeholders.”

The ABI also said it had called for a cut to the insurance premium tax, a cost which is levied on insurers but is passed onto consumers through the cost of their policies.

It has previously said that, adjusting for inflation, the average total cost of a settled car claim has increased by 23% from £3,500 in 2014 to £4,300 in 2023. Over the same period, also adjusted for inflation, the average premium rose by 8%, from £505 to £543, according to the ABI’s figures.

Consumer Intelligence’s data reveals the annual increases in quoted premiums across Britain in February:.

London, 64.8%.

Scotland, 61.9%.

West Midlands, 61.2%.

South East, 60.9%.

Eastern England, 57.7%.

North East, 55.5%.

East Midlands, 52.8%.

South West, 50.9%.

North West, 50.8%.

Yorkshire and the Humber, 49.8%.

Wales, 47.5%.