Drivers are now paying an average of £629 and this is highest increase in prices within a year since 2016.

Prices for car insurance are now the most expensive they’ve been since before the pandemic, when they fell because fewer cars were on the road during lockdowns.

Yet since the economy started reopening, insurance prices have begun to rise and, in the last three months, have shot up by £43, or 7%, according to the data from Confused.com. This is the steepest quarterly rise in more than five years.

Insurers readjusting prices

There are a number of reasons given for the rise, including the fact that insurers are now seeing the numbers of drivers on the roads returning to normal. This has increased the risk of accidents and claims in comparison to when there were fewer cars around during the pandemic.

Another reason cited by the comparison website for a rise in premiums is new regulations from the Financial Conduct Authority (FCA) introduced last January.

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The FCA introduced new rules to stop loyal drivers paying too much for insurance. Previously new customers were often given cheaper prices while loyal customers had their insurance increased every year. But now all premium prices offered need to be fair and based solely on a driver’s profile.

Insurers are no longer able to charge returning customers more, and have had to readjust their prices as a result.

Drivers no longer shopping around for cover

Half of all drivers surveyed by the website who had their renewal quote in the last quarter of 2022 said the price had increased, by £46 on average.

Of those, 40% then compared their premium price and switched to a different insurer, saving £55 on average.

A fifth (20%) found their renewal price to be cheaper, by £38 on average. Of those, 34% shopped around and found a different insurer, saving £59 on average.

The website is urging drivers to compare costs, even if their renewal price is cheaper than the previous year.

Men now pay more than women

Insurers are not allowed to discriminate between men and women when it comes to insurance pricing, following a law change in 2012.

Yet the data shows that men are paying an average of £672 while women are paying £557 on average.

The rate at which premiums increased also varied across the country. Drivers in London saw a 22% rise of £183 to an average of £1,008. This is the first time average prices have been higher than £1,000 in five years.

Outside of London, drivers in Bradford and Manchester saw the biggest hike to insurance costs, by £125 (17%), and £124 (16%) respectively.

Louise O’Shea, chief executive officer at Confused.com, said: “We are living through a financially difficult time. And like everything else, the cost of car insurance is increasing rapidly and this will hit us all hard.

“But the important thing to remember is that car insurance is one expense where you can save some money. It might be tempting to look at your renewal and accept it, especially if it’s around the same price as last year. But it’s also likely that there’s another insurer out there that can offer you a better price – and the only way to know is to shop around.”

How to cut the cost of insurance

There are lots of ways to reduce the cost of car insurance, including the following:

• Paying annually instead of monthly because insurers charge interest on monthly payments
• Being accurate with your mileage, you can find out how many miles you drove the previous year on your MOT
• Increase your excess and this could lower your monthly premium
• Enhance your car’s security and park it in a locked garage or somewhere nearby and well lit

We’ve also published a full guide with tips on lowering your home and car insurance costs.