Price hikes continue for motor insurance

Average motor insurance premiums rose by eight per cent in the fourth quarter of last year, driven by rising costs in energy and materials as well as continued part delays.

According to the Association of British Insurers’ latest Motor Insurance Premium Tracker, average premiums increased to £470, which is seven per cent higher than they were in the same period of 2021.

The ABI has also attributed the price hikes to new FCA rules around the pricing of motor insurance, which were introduced on 1 January 2022. The new rules ensure that the price paid by renewing customers is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as insurer, broker, or price comparison website.

Taking this into account, the average price paid for a new policy during the fourth quarter of 2022 rose by seven per cent while the average price paid on renewal of an existing motor policy increased eight per cent.

Jonathan Fong, Senior Policy Adviser, General Insurance, said, “Every motorist wants the best insurance deal, especially when coping with cost of living pressures, and insurers continue to do all they can to keep motor insurance as competitively priced as possible. Yet, like many other sectors, insurers continue to face higher costs, such as more expensive raw materials, which are becoming increasingly challenging to absorb.”