Exclusive: The average premium rose by 48 per cent in the 12 months to June 2023
Car insurance premiums have rocketed by almost 50 per cent over the past year, with millennials and older drivers hit hardest.
Exclusive data from the analyst Consumer Intelligence, which looks at quotes from Confused.com, Go Compare, Compare the Market and MoneySuperMarket, reveals that average premiums rose by 48 per cent on average in the 12 months to June 2023. Premiums are now at their highest since the start of 2018.
Car insurance is fast becoming one of the most expensive household bills, adding more financial pain at a time of high inflation and surging mortgage rates and rents.
In June, economists Ernst and Young warned that 2022 had been a difficult year for insurers and forecast that premiums would rise 16 per cent by the end of 2023. But the latest figures show that they’ve already soared four times higher.
David Trenner, 67, was last month shocked to discover that Esure was hiking the annual premium for his Renault Clio from £283 to £547 – a 93 per cent increase. “I expected a small increase because of inflation, but not 93 per cent,” he said.
Other drivers with insurers such as LV and Direct Line have also complained about eye-watering increases.
According to Consumer Intelligence, those aged 25 to 39 and 65 and over have been hardest hit by car insurance rises, with average premiums jumping by more than 50 per cent. Drivers in Scotland and London have seen their premiums rise the most.
It comes as executives at the top five firms were handed six- and seven-figure salaries and bonuses last year. Admiral Group gave a total of £2.15m to its chief executive Milena Mondini de Focatiis and £1.23m to chief financial officer Geraint Jones, while Aviva’s chief executive Amanda Blanc earned £5.52m.
Ros Altmann, a Conservative peer and a former government minister, told The Independent that “cost inflation will be a factor but cannot account for the 48 per cent [overall increase]”. She said a lack of transparency in insurers’ risk models and an increase in claims following the pandemic were also likely to be reasons.
But she conceded that not much could be done, adding: “I am not sure what regulators can do, as their last interventions have generally resulted in rising premiums for most people. Those who used to shop around diligently to take advantage of low-price initial offers cannot now do so.”The Financial Conduct Authority (FCA) said the growing cost of repairs had caused motor insurance prices to spike, but Tim Kelly, an insurance expert and owner of the website MotorClaimGuru.co.uk, said some insurers were hiking prices to increase profits after the Covid pandemic.
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