STRICTLY EMBARGOED UNTIL 00.01 MONDAY 15th OCTOBER 2018
Car insurance prices increase for first time in over 12 months
- Car insurance costs could start to creep up again after a period of declining prices -
- Car insurance prices increased by +£8 (+1%) over the past quarter to £760, on average.
- More than half (54%) of motorists who renewed their car insurance between July and September this year (2018) saw their renewal premium go up by £50, on average, according to a nationally representative survey of UK drivers(1).
- Louise O’Shea, CEO at Confused.com, urges drivers to check their renewal price and shop around before committing to renewing as insurers fail to reward loyalty.
- SAVING TIP: data shows 8am is the cheapest time to buy car insurance(2), with drivers saving up to £783(3).
The cost of car insurance appears to be creeping up once again, after a period of decreasing costs changes direction.
Car insurance prices in the UK have increased by +£8 (+1%) over the past quarter, on average – the first increase in over 12 months (Q2 2017), with the average cost now at £760. That’s according to the most comprehensive car insurance price index in the UK based on more than six million quotes a quarter from Confused.com and powered by Willis Towers Watson.
While this might seem like a small increase, it may be indicative of a change in direction for declining premiums. In fact, the last time prices took a similar turn, the cost of car insurance soon started to accelerate again. The price of premiums crept up from £591 in Q1 2015 to £600 (+£9) the following quarter, with prices going on to increase +19% (+£115) over the following 12 months (Q2 2016 - £715).
And it seems drivers are already starting to see the cost of their insurance creeping up. A nationally representative survey of UK drivers found that more than half (54%) of motorists who renewed their car insurance between July and September this year (2018) saw their premium go up by £50 when they opened their renewal notice(1), on average, with insurers failing to reward loyal customers. Although, worryingly, three in five (60%) of motorists who renewed their insurance during these months stayed with the same insurer, suggesting they did not seek a better deal elsewhere, rather than seeking out a better deal elsewhere(1).
And with the cost of fuel creeping up to record prices(4), motorists are no doubt feeling the pinch. So to help motorists save on the cost of their car insurance, Louise O’Shea, CEO at Confused.com is urging drivers to check their renewal price and shop around to find a better deal before committing to renewing, as it is highly likely that there will be another insurer out there who will offer a better price. And Confused.com is giving motorists the chance to save even more by guaranteeing to beat their car insurance renewal price, or give them the difference, plus £20(5).
There are many ways motorists can save money on the cost of their insurance, and this includes being savvy about the time they shop. In fact, Confused.com data reveals motorists shopping around online at 8am received the cheapest price on average(2) and could save up to £783(3) compared to those browsing in the early hours of the morning (2am), when car insurance is at its most expensive, according to the data. Overall, the morning (6am – 9am) appears to be the optimum time to get the best prices, while buying car insurance in the evening could add on a few extra hundred pounds.
No doubt any tip or trick to reducing premiums will be welcomed by drivers, especially if prices continue to rise. Although, it seems car insurance prices are still -9% (-£78) cheaper than 12 months ago. This is due to several changes to the insurance industry, including the way injury claims are calculated, known as the Ogden Rate. The UK Government dropped the discount rate to -0.75% in March 2017, meaning insurers had to pay more for personal injury claims, which drove drivers’ premiums upwards significantly. However, the expectation of a further rate review(6) has allowed insurers to soften their prices.
And now prices are starting to creep up again, motorists are facing slight increases in their premiums, although some more so than others. Men are still paying more than women, with the gap increasing to £94 since the last quarter (Q2 2018). Male motorists are now paying £802, on average, while women pay £708, in comparison. While the EU gender directive prohibits insurers from assessing a driver based on their sex, there are other risk factors which cause men to have higher premiums. For example, men tend to drive more expensive cars with larger engines and loaded with new technology, on average, which makes for higher-value claims(7). They also tend to have significantly more motoring convictions than women, as highlighted in Confused.com’s ‘Gender Gap in 100 Drivers’ research.
Generally, drivers of all ages are starting to see their car insurance costs creep up again. In particular, 17-year-olds saw the biggest monetary change in the cost of their car insurance, with the average price accelerating by +£64 (3%) in just three months. And, surprisingly, 26-year-olds saw the biggest percentage increase, with their average car insurance cost creeping up by +£38, equivalent to +4%, over this last quarter to an eye-watering £1,024, on average.
Meanwhile, 18-year-old drivers are still bearing the brunt of sky-high prices, being the only age paying more than £2,000 (£2,058) for their car insurance, on average. On the other hand, motorists starting to consider retirement may be pleased that they have been relieved of inflated prices. Drivers aged 60+ are now all paying £503 or lower, up from £496 in Q2 2018, and are the cheapest prices paid by drivers across the board, on average.
Looking to the regions, no doubt the majority of motorists across the UK will be groaning when shopping for car insurance, as they see increases of up to 3% since the last quarter. In particular, the East Midlands and South Central England faced the biggest monetary rise of +£18, equivalent to +3% and +2% respectively. Meanwhile, the average price in the West Midlands increased by +1% (+£8) in three months, taking the average price to £939 – overtaking Outer London for the first time on record.
Comparing the regions, it is drivers in Inner London who face the most expensive prices of anywhere in the UK and the only region to pay more than £1,000. The average cost of car insurance in the region is now £1,157 after a mere -£3 (0%) drop over the quarter. And Manchester and Merseyside, the West Midlands and Outer London are the only other regions with drivers paying more than £900, on average.
On the other hand, the cost of premiums in Northern Ireland appear to be plummeting. Prices in the region dropped a whopping -17%, equivalent to -£181, in 12 months, following a -16% year-on-year drop last quarter (Q2 2018). But it is still motorists in the South West who benefit from the cheapest prices across the board, paying £566, on average, despite a +£15 (+3%) growth on last quarter’s price.
On a more granular level, motorists in Kirkwall in the Scottish Highlands and Islands will be feeling the sting of the increases the most as prices in the area accelerated by a whopping 22% (+£130) in just three months. This takes the average cost of car insurance in the area to £712, up from £582 in Q2 2018. This is just £22 off the most expensive price paid by drivers in the area (Q4 2017). However, this isn’t the only area to have been slapped with big quarterly increases. Motorists in West Central London (Inner London) saw an extra +£80 (+7%) added to their prices, compared to three months ago.
Some areas in the UK also saw their prices increase year-on-year, despite an overall drop in the UK average. In particular, the Hebrides and Kirkwall, both in the Scottish Highlands and Islands saw an increase of +£15 (2%) and +£8 (+1%) respectively, as well as Hereford in the West of England, where premiums saw a mere +£3 (0%).
But it’s not just rising car insurance prices motorists across the UK are having to contend with, drivers are also paying significantly more for fuel that they were a year ago. According to Confused.com’s fuel price index, which collates prices from 83% of the UK’s fuel stations, drivers are now paying 130.8p for petrol and 134.8p for diesel, on average(4). This means that the average driver of a medium-sized car is now paying £75 for a full tank of petrol and £77 to fill up with diesel(4). And if car insurance prices continue to increase it looks like it is could be an expensive year for motorists.
Louise O’Shea, CEO at Confused.com comments: “Over a year ago we saw car insurance prices start to decrease, but now it seems prices may be changing direction and starting to creep up once again. And there is no telling how long it will be before they start to really accelerate.
“Clearly there are still many cases of motorists unnecessarily paying more for their car insurance when it comes to renewing. I personally had to renew my car insurance this month, and while I was quoted a cheaper price than last year by my existing insurer, I managed to save an extra 40% by shopping on Confused.com - £300 cheaper than what my insurer was quoting.
“And this is why it is so important for drivers to be savvy and shop around as there could be a better price out there for them. And we are so certain of this at Confused.com that we are offering to beat drivers’ renewal prices, or give them the difference, plus £20(5).
“Please don’t pay more than you have to - take a few minutes to check your renewal letter and get a cheaper price from Confused.com.”
- ENDS -
Notes to Editors:
More than six million quotes are used in the construction of each quarter’s insurance price index - this makes it the most comprehensive insurance index in the UK. Unless otherwise stated all prices referred to are for comprehensive cover.
The following web pages will be updated to reflect the new figures and can be linked to: http://www.confused.com/car-insurance/price-index
- Statistics obtained from a nationally representative survey of 2,000 UK motorists carried out by One Poll on behalf of Confused.com. The survey ran between 04/10/2018 and 09/10/2018.
- According to Confused.com data, prices quoted between 8am and 9am (8am timestamp) were the cheapest - £929. Based on a sample of 1,000 quote requestors. Data gathered between July and September 2018.
- According to Confused.com data, prices quoted between 2am and 3am (2am timestamp) were the most expensive - £1,712 leaving a £783 difference between the cheapest and most expensive. Based on a sample of 1,000 quote requestors. Data gathered between July and September 2018.
- Confused.com’s fuel price index collates prices from 7074 out of 8496 fuel stations across the UK. Prices are updated every week: https://www.confused.com/on-the-road/petrol-prices/fuel-price-index. Prices correct as of 08/10/2018
- https://www.confused.com/beat-your-renewal. Must be a like-for-like policy.
- Car insurance for men is on average higher than for women, for example because certain male-dominated occupations are higher risk to insurers, which is reflected in the premium charged. Also, on average, men drive larger and more costly vehicles. For example, according to Confused.com’s quote data, the average female driver’s car has a 1500 cc engine, compared to 1800 cc for men. Women are most likely to quote for an engine between 1200-1600 cc, men are most likely to quote for a 1600-2000 cc vehicle. Men have twice as many motoring convictions as women. Men drive, on average, vehicles around 10% older and more expensive than women. When men make claims their value averages 15% more than women.