Car insurance premiums rise 8% to £470
The average price was 8% higher than the last quarter of 2021, according to the data which measures the price paid, not quoted, for cover.
Several reports have been published recently echoing the trend of rising prices. Car insurance was up £100 in the last year, according to Confused.com, while the cost of setting up and cancelling a policy has also risen, according to Defaqto.
New policies are now more expensive
The price of a brand new policy was higher. It rose by £37 to a record higher of £531. While the cost of an existing car insurance policy which a customer decided to renew was an average of £428, a rise of £31 over the quarter.
Over 2022, the average price paid to renew an existing policy fell 7% to £392 when compared to 2021. The cost of a new policy rose 11% to £500 on average.
The change in these two prices reflects the introduction of pricing rules for insurers. New rules were introduced at the start of 2022 by the Financial Conduct Authority (FCA) which meant insurers could not offer new customers cheaper deals than existing customers.
Rising costs for insurers
The ABI says insurers are also facing increasing costs. These include energy inflation adding an average of £71.75 to every repair, paint and material costs rising by nearly 16%, and average paint cost for repairs rising by 20%.
It also said around 40% of all work is being affected by parts delays and the cost to repair courtesy cars is up by around 30%.
Jonathan Fong, senior policy adviser for general insurance, said: “Every motorist wants the best insurance deal, especially when coping with cost-of-living pressures, and insurers continue to do all they can to keep motor insurance as competitively priced as possible.
“Yet, like many other sectors, insurers continue to face higher costs, such as more expensive raw materials, which are becoming increasingly challenging to absorb.
“Anyone concerned about being able to continue paying their motor insurance premium should speak to their insurer about any alternative payment options that may be available.”
We have also published a guide on how you can cut the cost of your home and motor insurance.