The cost of car insurance has risen to an “all-time high” with motorists shelling out a record 40 per cent more for insurance premiums than last year, new data reveals.
On average, UK drivers are now paying £776 to insure their cars, up from £222 one year ago, according to Confused.com and Willis Tower Watson’s (WTW) car insurance price index.
Younger drivers between 17 and 20 took the biggest hit, with prices rising 60 per cent and taking the average cost of a motor policy to £2414.
“The price increases we’re seeing are so significant that it’s going to cause real financial impact to many people. We know that there’s a lot of factors going into this, with inflation pushing up the cost of claims for insurers,” Steve Dukes, CEO at Confused.com, said.
Tim Rourke, UK head of pricing, product, claims and underwriting at WTW, said the high levels of claims inflation is being driven by “the sharp rise in used car prices, amplified by rising vehicle theft, spare part delays, longer repair times and higher wages”.
The cost of repairs and other inflation-related pressures have pummelled the insurance sector over the last year, denting the margins of some of the biggest UK companies.
In a report last month, consultancy EY said that the insurance market had experienced its worst performing year in a decade in 2022.
“With inflation expected to remain high for the foreseeable future, EY expects losses to continue in 2023, and forecasts an NCR of 108.5 per cent this year,” the firm said.
Over 50s specialist Saga said last month that its motor insurance segment had weighed down profits and is currently in talks to sell the underwriting arm of its business.