Motor premiums creeping up

The average price of motor insurance rose in the second quarter, according to data published by the ABI.

Its Motor Insurance Premium Tracker found that the average policy has increased to £419. This represents a marginal increase of £5 on the previous quarter, but remains £11 lower than the same time in 2021.

However, while it is still too early to fully assess the impact of the Financial Conduct Authority’s changes to the rules on the pricing of motor and home insurance introduced on 1 January 2022, ABI figures reveal an increase in the difference between new and renewed average premiums paid.

The average premium paid for a new policy in the second quarter was £129 higher than for a renewed policy. Average premiums for new policies increased by three per cent to £500 and average premiums for renewed policies increased by 0.5% to £371.

Meanwhile, premiums were also inflated by the continued global shortage of semiconductors, which has seen a dramatic rise in used car prices, repair inflation and the rising costs of raw materials.

Callum Tanner, ABI Manager, general insurance, said: “Insurers appreciate that these are difficult times for many households dealing with the rising cost of living. While, like many other sectors, motor insurers are facing higher cost pressures of their own, which are becoming increasingly challenging to absorb, they will continue to do all they can to keep motor insurance as competitively priced as possible.”