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What's happening to car insurance premiums?

Comparison site says prices are rising as claim numbers increase

Car insurance premiums are on the rise once again, according to the latest report from Confused.com.

The comparison website's quarterly index found that the prices quoted to drivers increased by an average of 6% year-on-year between April and June 2022. 

Here, Which? takes a look at what's happening to the cost of car insurance and offers advice on how much notice you should take of headline figures.

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What's happened to car insurance prices?

The average car insurance premium has risen to the highest level in nearly two years, according to new research.

Confused.com found that premiums increased by £32 (6%) year-on-year in the second quarter of 2022, to reach an average of £554.

Louise O'Shea of Confused says: 'With all of us still adjusting to life after lockdown, it's likely that price rises are due to a rise in insurance claims as we get back into some sort of routine.

'While prices are increasing, we know that car insurance is one area where you can still save money, which could help balance out price hikes in other areas.' 

How much could you save by switching?

Confused says loyal customers are facing some of the biggest price increases to their premiums. 

Its survey of 2,000 drivers found 45% of those who'd renewed their policies between April and June had seen their premiums increase, by an average of £41. 

The comparison site says drivers who are quoted a higher renewal price by their provider could save £54 by shopping around and switching insurers.

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Have the FCA's changes had an impact on insurance pricing?

In January, the Financial Conduct Authority (FCA) introduced new rules to stop insurers charging existing customers more than they would new customers.

The abolition of the loyalty penalty was designed to make prices fairer, and it is still too early to say exactly what impact the changes have had.

Confused's data indicates that many drivers are paying more than before. Its report also raised concerns that some aren't fully aware of how the changes work. 

One in 10 drivers who responded to Confused's survey wrongly believed the new rules meant their renewal price couldn't rise. 

How gender, location and age affect premiums

With so many factors affecting premiums, there are always going to be winners and losers. 

Gender, location and age all have an impact on premium prices. For example, Confused says female drivers saw rises of £28 year-on-year, while men saw rises of £34.

Likewise, drivers in Northern Ireland saw their prices increase by 12% year-on-year (£64), while premiums for drivers in the south of England and East Midlands fell by 1%. 

Younger drivers fared worst when it came to price increases; 21-year-olds suffered prices hikes of 9% (£98), while 20-year-olds saw rises of 8% (£92).

The biggest decrease was seen by 32-year-old drivers, who benefited from prices dropping 3% (£21) year-on-year.

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Why do trackers disagree about what's happening to premiums? 

With so many variables, it can be difficult to get to grips with the true cost of car insurance. 

Reports such as Confused's index give us a general view of the market, but figures vary significantly between data sources. 

Confused publishes its price index on a quarterly basis, and says its findings are based on 6m quotes each quarter. Its fellow comparison website Compare the Market also releases quarterly data, though it is yet to publish figures for April to June.

The Association of British Insurers (ABI) releases the most comprehensive data on car insurance pricing, again on a quarterly basis. 

Its most recent report was published in early May. It found that insurance prices dropped by 5% in the first quarter of 2022 - a period when other indices said prices were rising.

The ABI's data is based on the price paid by drivers and reflects the premiums paid by all customers (both those renewing and those shopping around), whereas indices from comparison sites only reflect quotes given to customers searching for car insurance. This explains why the headline findings can differ. 

With this in mind, it's important to remember that the figures you see in reports won't necessarily reflect the price you'll pay when you come to renew or search for a new deal. 

How to avoid car insurance scams

As with any financial product, it's important to beware of fraudsters when searching for car insurance. 

If you click on a social media advert for an insurance broker and receive a much lower quote than the competition, you may be being targeted by a 'ghost broker' - an unlicensed intermediary selling you fake car insurance.

If you use a broker to find insurance, check the FCA's Financial Services Register to ensure it is regulated. Above all, be suspicious of any deal that seems too good to be true. 

How to save money when renewing your car insurance

If your car insurance is coming up for renewal, there are plenty of ways to ensure you don't pay more than you need to.

Our top tips include paying annually rather than monthly, avoiding unnecessary add-ons and setting the right excess. You can find these tips and many more in our guide to finding cheap car insurance


Which? Limited is registered in England and Wales to 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative of Inspop.com Ltd for the introduction of non-investment motor, home, travel and pet insurance products (FRN 610689).Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd.