Drivers in the UK are paying an average £550 for a comprehensive car insurance policy, according to a survey which warns the cost is likely to continue to rise.
Premiums fell dramatically in 2020 as COVID-19 lockdowns and restrictions forced most drivers to curb their use of the roads, driving accident records down to historically low levels while intense competition for business among insurers also helped.
But the study by price comparison site Confused.com and insurance broker Willis Towers Watson (WTW) found that insurance costs started to recover in the autumn of last year as traffic levels returned to more normal levels.
They reported that the average premium in the first quarter of 2022 represented an 18-month high – up £21 on the October-December quarter.
Drivers in inner London faced the highest premiums, paying an average £864, while those in south Wales were likely to pay the least amount at £445.
Young drivers still pay the most, wherever they live, with the average cost of a policy at £1,419, according to the survey – with the cost of fuel adding to the squeeze on motorists generally.
Tim Rourke of WTW said he expected bills to continue rising as companies pass on rising costs – with the rate of inflation currently at a 30-year high because of soaring energy prices – signalling the end of the era of easing premiums.
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“As people return to more normal patterns of work and life, we are seeing those reductions in premiums gradually unwind.,” he said.
He also cited new rules imposed by the City watchdog that ensure consumers renewing policies are not charged more than new customers.
A separate report this week blamed the introduction of the FCA’s crackdown on so-called ‘price walking’ for rising premiums.
Consumer Intelligence said prices rose by as much as 5% in January alone before stabilising.
Louise O’Shea, CEO of Confused.com, said of the picture: “Prices could continue to increase simply because insurers are likely to be facing more claims than last year, as people start to drive more frequently, and this just means insurers will have to be as competitive as possible.
“And in turn consumers will need to continue to shop around, as the assumption that renewal prices won’t increase clearly isn’t true.”
