Car insurance premiums ‘starting to stabilise’

Comprehensive car insurance premiums have decreased for the second consecutive quarter following a two-year upward trajectory in pricing.

According to the latest Confused.com Car Insurance Price Index, published in association with WTW, prices fell by 6% (£59) between April and June 2024, with UK motorists paying £882 on average.

The drop came following a 5% (£53) decrease in premiums during the first three months of this year, the index, which was published today (17 July 2024), showed.

“After a sustained period of significant rate increases to counter the high levels of inflation, it is interesting to see from this data a change in insurers’ behaviour, indicating that premium adequacy may now be sufficient to allow insurers to drop rates,” Tim Rourke, WTW’s head of P&C pricing, product, claims and underwriting, said.

“However, insurers still face a number of ongoing challenges – including the rising cost of materials and labour, second hand cars and advanced vehicle technology, as well as operating in a changing political landscape.”

Annual look

The impact of such challenges was noticeable in the year-on-year comparison, with car insurance premiums increasing by 14% (£106) from Q2 2023.

However, this was lower than the 40% rise from Q2 2022 to Q2 2023, when the average premium stood at £776.

“It seems after a long period of such steep increases in car insurance prices, the industry is starting to stabilise, adjust to increased claims costs and bring prices down,” Confused.com chief executive Steve Dukes said.

“However, prices are still up year-on-year, creating opportunities for insurers to grow their customer base and for consumers to save by switching.”

Market competition

Regionally, motorists in the north west saw the largest percentage decrease in the price of car insurance (8%), with average premiums costing £819.

The smallest annual decrease was seen in Northern Ireland – drivers saw a quarterly cut of 4%, with average premiums costing £925.

The south west of England remained the cheapest region for car insurance, with average premiums seeing a quarterly drop of 6% from £606 to £571.

And inner London remained the most expensive region, with average prices recorded at £1,404 despite a 7% decrease in price (£75) in the last three months.

Outside of the capital, the West Midlands remained the most expensive area, with average premiums falling by 7% in the last three months to a cost of £1,082, followed by Manchester and Merseyside (£1,064).

Dukes explained that those using industry insights to influence pricing was aiding firms’ market position.

“We’re finding insurers using industry insights and data are able to compete more effectively by increasing the speed at which they reflect changes in the market within their pricing,” he said.