THE steepest increase in car insurance costs in more than four years puts the average price in the UK at the highest point since this time last year.
Drivers can now expect to pay £539 for their car insurance, on average, as prices are now £25 (5%) more expensive than three months ago.
That’s according to the latest car insurance price index (Q4 2021) by Confused.com, powered by WTW. Based on more than six million quotes, it’s the most comprehensive car insurance price index for new business in the UK.
Throughout the coronavirus pandemic, car insurance prices dropped significantly. However, in the past three months (Q4 2021), car insurance prices increased quarter-by-quarter for the first time in over a year. And while prices have risen slightly in the past, this is in fact the steepest quarterly increase since midway through 2017.
This increase in price means the cost of car insurance is edging closer to the price paid by those shopping around 12 months ago. Over the past year, prices have been significantly cheaper, with annual savings varying between 9% to 16%when shopping around each quarter. In terms of monetary value, earlier in the year average prices were, at one point, as much as £97 cheaper year-on-year. However, the average cost of car insurance in the UK is now just £36, or 6%, less than prices 12 months ago, suggesting prices may be returning to the pre-pandemic levels.
While these price increases may come as bad news to drivers, Confused.com experts have been predicting this U-turn for some time. A significant drop in the number of cars on the road throughout the coronavirus pandemic, and a subsequent fall in the number of claims being made led to a sharp drop in premiums with prices reaching a six-year low just last quarter. However, prior to this, prices were steadily starting to increase as claims pay outs were becoming more and more expensive for insurers, as the pandemic and ongoing delays caused by Brexit meant that repairs and replacements were not only more expensive but taking longer to complete. And this was reflected in the prices being offered to customers.
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