British Motorists Pay £1,000 to Insure a Car as Costs Soar - BLOOMBERG
JANUARY 16, 2024
Heavy traffic makes it way along Park Lane during a national rail strikes in London, UK, on Wednesday, Oct. 5, 2022. Two rails unions planned walkouts on Oct. 5, when people will be making their way home from the Conservative Party Annual Conference in Birmingham. Photographer: Chris J. Ratcliffe/Bloomberg , Bloomberg
(Bloomberg) -- UK drivers are paying almost £1,000 ($1,272) a year for their car insurance as the cost-of-living crisis continues to bite.
Quotes for annual cover jumped £366, or 58%, to a record £995 on average in 2023, according to data from comparison site Confused.com and insurance broker WTW.
Eighteen-year-olds are now facing the highest costs, paying more than £3,000 annually for the first time, with average premiums leaping 84% to £3,162. Customers who renew their existing policy are likely to see quotes rise more than those switching, Confused.com said.
The soaring premiums come as Britons continue to grapple with rising prices for a range of goods and services, such as groceries, fuel and electricity.
There are signs that car insurance price rises could also be easing. Prices in the fourth quarter of 2023 climbed 8%, the smallest percentage increase in nine months, hinting at some respite for motorists.
That said, premiums are likely to keep rising for some time, warned Confused.com’s Louise Thomas.
“Claiming is one of the biggest factors when it comes to insurers pricing up policies,” she said. “And with the cost of paying out for claims being considerably high, insurance prices are going to be too.”
Insurers have defended themselves over costs that have soared well above inflation, arguing that they are having to pass on the higher costs of repairs, parts and replacement cars. Aviva Plc Chief Executive Officer Amanda Blanc said in August that her company was not achieving excess profit despite higher premiums and said they needed to rise further to catch up with inflation that the industry was seeing.
The UK is not alone in having to stomach extra costs to run a car. Prices of motor vehicle insurance in the US rose 20% in December from a year earlier, the biggest rise since 1976. Car insurance tends to be even costlier in the US than in the UK.
Despite costs continuing to rise, inflationary pressures are set to ease again this week, with the Consumer Prices Index on Wednesday likely to show a slight drop to 3.8% through December from 3.9% the month before.