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UK car insurance prices fell at the start of 2024 in the first quarter-on-quarter drop in more than two years, signalling some relief for households after costs hit an all-time high.
Motorists were quoted £941 on average for an annual insurance policy between January and March, according to a widely watched index of price comparison site quotes published by Confused.com and insurance broker WTW.
That was up 43 per cent from the same period last year, but down from £995 between October and December last year, the highest level since data collection began in 2006. The methodology of the index was amended a few years ago, with historic figures restated to be comparable.
Tim Rourke, UK head of P&C pricing, product, claims and underwriting at WTW, said the data suggested “the relentless rise in prices may finally be turning a corner”.
Drivers aged 17 were the only cohort to see the price of cover rise in the first quarter, with the average yearly premium quote up 1 per cent at £2,919.
Insurance companies have lifted prices drastically in the past couple of years after spiralling inflation in their claims costs — as items such as car parts and second-hand cars became much more expensive — left them with their worst underwriting losses in a decade.
The increases have put considerable pressure on the millions of households that rely on car insurance, compounding the cost of living crisis.
Some executives have in the past few months pointed to signs of premiums catching up with inflation. In March, the boss of Admiral said the sector was in a “different situation” and that the FTSE 100 company had even put through a “small price decrease” recently to win business.
The price rises have sparked concern among insurance buyers and consumer groups. In January, industry data based on policies sold, rather than comparison quotes, showed the average premium paid for insurance was £627 in the final quarter of last year, up one-third on the same period in 2022.
In a hearing on Wednesday, MPs on the House of Commons Treasury select committee questioned industry executives on whether such increases were justified.
Angela Eagle, Labour MP for Wallasey, said: “My constituents and many people that write to the committee feel that insurance is becoming more of a rip-off.”
Charlotte Clark, director of regulation at the Association of British Insurers, said part of the reason that the rise in prices looked “so significant is because it is coming off the back of the pandemic”, when the cost of insurance fell as miles driven, and accidents, plummeted.
Source: Economy - ft.com
