UK car insurance premiums fell by 14% in last year – WTW

Comprehensive car insurance premiums have seen a sharp fall of 14% (£87) since the start of the Covid-19 pandemic in quarter one of 2020, with UK motorists now paying £538 a year on average.

This is according to the latest Confused.com Car Insurance Price Index, in association with Willis Towers Watson (WTW), which is based on price data from almost 6 million customer quotes per quarter.

These latest figures represent the biggest annual drop since 2014 and the fourth largest decrease in the 15 years since the Index was launched in 2006.

Therefore, comprehensive car premiums are now the cheapest they have been since 2015, after falling by 7% (£37) in the first quarter of 2021.

Graham Wright, UK lead of P&C personal lines pricing at WTW, said: “The scale of the reduction in premiums seen over the last quarter reflects the realities of [a] notably better claims experience under successive Covid-19 lockdowns.

“The measures have continued to have an impact on the number of drivers on the road - particularly learners - and the miles driven, leading to fewer claims.”

This quarter also sees the introduction of WTW’s updated calculation methodology, which uses machine learning techniques to enable the Index to provide an accurate view of the current market.

Comparisons with results from this quarter have been calculated based solely on values generated by the new Index.

Further uncertainty

From January to March 2021, the cost of comprehensive car insurance dropped across all regions in the UK by at least 4%.

Drivers in the north west of England, as well as the Leeds and Sheffield region, saw a quarterly drop in their average annual premium prices of 8% - this amounted to a £47 drop to £521 and a £54 decrease to £619 respectively.

In addition, drivers in Huddersfield and Blackburn saw a quarterly fall of 10%, reducing the premiums of drivers in these areas to £581 and £674 respectively.

But drivers in Llandrindod Wells experienced the smallest drop in premium prices of just 1% (£3) - premiums were an average of £333 in the last three months.

Wright added: “The easing of Covid-19 restrictions and ongoing pandemic conditions naturally create further uncertainty in pricing for future claims experience.

“However, the bigger forward-looking challenge for insurers and intermediaries alike is the pricing action needed in the run up to the implementation of the FCA’s general insurance pricing practices remedies at the end of the year. This will cause the uncertainty in market pricing levels to continue for months to come.”

The cheapest town for comprehensive car insurance is now Kirkwall in the Scottish Highlands, where drivers paid £317 on average for an annual policy in the first quarter of 2021.

	Comprehensive Car Insurance - Quarterly Price Trends
	2020 Q1	2021 Q1
Average Premium	£625	£538
% Change in Quarter	-1%	-7%
£ Change in Quarter	-£5	-£37
% Change Annually	+6%	-14%
£ Change Annually	+£36	-£87

Changing consumer habits

Meanwhile, west central London is now the most expensive place in the UK to buy car insurance, with policyholders paying £1,049 a year.

Male and female drivers aged 71 or above saw a 9% quarterly price decrease, with premiums recorded at £410 and £346 respectively.

Male drivers aged between 21 and 30 experienced the smallest drop in prices of 5%, while annual premiums decreased from £1,165 to £1,108 for those aged 21 to 25.

This decrease continued for male drivers aged 26 to 30, from £897 to £853.

Louise O’Shea, chief executive of Confused.com, said: “It’s been just over 12 months since we first went into lockdown and the effects of changed consumer buying habits have been reflected in the sharp drop in insurance premium costs.

“The impact of fewer drivers on the roads has led to fewer claims, which has allowed shoppers to see some of the biggest savings on their car insurance in almost six years. The sensitivity of the current economic climate means that these savings couldn’t come at a better time.

“While the country is starting to reopen, it’s still likely that the changes to our driving behaviour will continue for some time. And as insurers react to industry changes, it’s natural that insurance offerings and pricing are reflective of customers’ behaviour and changing needs.”