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Car insurance premiums set to rise by 14% in 2023

Rebecca Goodman
Written By:
Rebecca Goodman

Drivers will see car insurance prices rise by 14% in 2023, new figures have suggested.

There are several reasons for this, including the introduction of the General Insurance Pricing Practices (GIPP) which have seen insurers unable to offer existing customers a higher price than new customers would get.

The predictions, from the consultancy firm Oxbow Partners, suggest prices will continue rising next year before levelling out in 2025.

It said prices have risen faster than first predicted this year.

Paul De’Ath, head of the Oxbow Partners Market Intelligence team, said in a report: “The pricing cycle remains hard with premiums increasing faster in the first quarter than many had expected.

“Motor insurance customers will have seen increased prices both from their existing insurer at renewal and when searching for the best deal from other providers.”

Overall, premiums rose 2% in the first quarter of this year, to an average of £478. This is 16% higher than in the first quarter of 2022 and the highest since quarter four of 2019, when prices were £483, according to the Association of British Insurers (ABI).

The average amount paid by drivers renewing their policy rose by £8 to £436 and the average price for a new policy was up £14 to £545.

Motorists consider scrapping cover

It comes as recent data shows that car insurers paid out a record amount in claims in the first three months of the year. Collectively, £2.4bn was paid out, the highest quarterly amount on record.

Predictions of rising prices could suggest more insurance customers will lower or get rid of their cover. Research shows that 21% of insurance customers have considered scrapping an insurance policy to save costs amid the cost-of-living crisis.

But driving without the correct insurance is illegal and could result in a fine, an insurance policy being invalid, or even a court case in some circumstances. There are lots of ways to reduce your cover without cancelling, as we explain in our article looking at saving money without cancelling your insurance.