Car insurance costs soar at record rates with London worst affected
The cost of car insurance has skyrocketed at the highest rate in over a decade this year, according to a key industry index.
The average quoted price of car insurance rose by 61 per cent in the year to August, according to the latest Consumer Intelligence price index, the highest annual increase since records began over a decade ago.
London saw the biggest jump at a whopping 69.5 per cent, significantly ahead of the rest of the country. Under 25s were the worst affected demographic, seeing their quoted premiums rise 66.7 per cent.
Annual prices were bumped up by a record 22 per cent rise in the three months to August, the biggest quarterly increase ever recorded by the index.
“Motorists of all ages have seen new business quotes soar over the last year and many will likely be feeling the pinch in their household budgets against a backdrop of other rising costs of living,” Max Thompson, insurance insight manager at Consumer Intelligence, said.
The cost of car coverage has rocketed up this year as inflation jacks up the cost of replacement parts for vehicles and increases labour rates.
The cost of a premium in September sat at £278, a near half increase on the previous year, according to research from Compare the Market.
Major insurers have had their margins pummelled by claims inflation this year, with Admiral and Direct Line both firing warning shots.
Experts have also warned that the rapid transition to electric vehicles (EVs) is likely to bump costs yet further, as the price of insuring greener cars is far more expensive than their combustion engine counterparts.
A shortage in the number of mechanics capable of fixing EVs, coupled with a limited supply of parts needed for repairs has led experts to warn that insurers could pull out of covering some models entirely.
Andy Moody, car insurance expert and founder of broker Go Shorty, told City PM earlier this month “we’ll see more insurers move away from other segments in the next 12 months to compensate” for rising costs, shortly after John Lewis halted policies for battery-powered vehicles.