Car insurance premiums hit record highs as claims costs surge
Car insurance premiums have hit record highs as insurers battle rising claims and heightened costs related to insuring electric vehicles, according to new data.
UK motorists paid £924 on average in the third quarter of 2023 – their highest levels since WTW and Confused.com started tracking the data in 2006 – as insurers battle sustained cost pressures.
The average price paid for comprehensive car insurance continued its upward trend after soaring 58 per cent, which is £338, over the last 12 months.
This isn’t new, however, as car insurance costs have now increased for eight straight quarters, according to the WTW/Confused.com Car Insurance Price Index, which is based on price data compiled from over 6m quotes per quarter.
“For a second consecutive quarter, premiums have increased so rapidly that we’re seeing the highest prices recorded across all areas of the UK,” said Steve Dukes, chief executive of Confused.com.
“That’s because insurers are having to deal with a lot right now, such as an increase in claims and having to price for more expensive cars on the road – such as electric vehicles.”
Earlier this year, a report by Thatcham Research warned that the transition to battery electric vehicles (BEVs) will “force a whole-scale adaption of the motor insurance sector” as it struggles to find a solution to the additional costs involved in insuring the new technology.
Duke, did, however, offer some encouragement and said: “As these adjustments happen, there will come a point where we see price growth settle.”
But he called on insurers to be doing more to keep prices affordable.
Major motor insurance groups, such as Admiral, have seen profits rise as consumer bear the brunt of inflation and the cost of policies.