There’s bad news for drivers in London, as new data reveals the average cost of car insurance has increased in the past 12 months. However, research shows savvy drivers can combat these rises by shopping around.
New figures reveal drivers in London could pay as much as £1,213 for their car insurance, on average, following steep annual increases..
That’s according to Confused.com’s latest car insurance price index, powered by Willis Towers Watson. Based on more than six million quotes every quarter, it’s the most comprehensive car insurance price index in the UK.
The data reveals Inner London is the most expensive region in the UK for car insurance, after prices climbed by £56 (5%) in 12 months to £1,213. Meanwhile, those in Outer London have also experienced a price increase of £48 (5%), meaning the average price of car insurance in the region is now £986.
Drivers in Harrow have been hit hardest by these increases, as the price of car insurance in the area has soared by £77 (7%) in 12 months. This means drivers in this area can now expect to pay £1,143 for their car insurance, on average.
However, this isn’t the highest price paid by drivers in London. East London is revealed to be the most expensive area for car insurance, with the average price now £1,317, following a £56 (4%) increase in the past year. Meanwhile, Ilford tops the list for prices in Outer London, with drivers in the area now paying £ 1262, on average, following a £54 (4%) increase year-on-year.
These increases are mirrored across the UK, with figures revealing the average price of car insurance is now at £783, following a £23 (3%) increase over the past year.
The data is released following an interim report by the Financial Conduct Authority (FCA), which exposes ‘dual pricing’ practices which inflate premiums for loyal customers who renew year-after-year, many of whom are vulnerable(1).
According to the FCA’s report, insurers are offering cheaper prices to new customers in order to win their business at the expense of bumping up prices for loyal customers. But if insurers are forced to balance out the way they price customers, this could see prices for new customers increase even further. This is why Confused.com is urging drivers to shop around to find the cheapest price.
Evidence of this behaviour was found in further research by Confused.com, which reveals 43% of drivers who received their renewal in the past quarter (July – September), were being charged £53 more, on average. Although, worryingly, 38% went on to renew with the same insurer, despite the price increase. Most (94%) made the decision not to switch on the basis that the price increase wasn’t significant.
The research also showed that people stay loyal with the hope that they will be rewarded. However, this is clearly not the case. According to the research, drivers stay with their insurer for three years, on average. In fact, nearly one in 10 (7%) admit they stay with their insurer for more than 10 years. But it also highlighted that switching can save, with those shopping with a price comparison website saving £61, on average.
But the FCA has raised concerns that consumers who choose to automatically renew with their current provider are paying higher prices for their insurance than they would if they shopped around. And insurers are targeting these customers who are less likely to shop around with higher prices. As a result, the FCA highlighted the need to shop around, stating “many consumers who switch or negotiate their premium can get a good deal”. And this applies even if the increase is only minimal.
Amanda Stretton, motoring editor at Confused.com, echoes the FCAs findings and urges drivers to shop around as it’s highly likely there could be another insurer who wants your business.
The FCA is expected to release the full report in early 2020 and is exploring measures to shed more light on insurance pricing. But in the meantime, Confused.com is urging motorists to take things into their own hands and shop around to seek out a better price. To further incentivise drivers, the company is giving them the chance to save even more by guaranteeing to beat their car and home insurance renewal, or give them the difference, plus £20(2).
As car insurance prices start to ramp up year-on-year, drivers will see the difference in their renewal price, although some more so than others. In particular, female drivers are bearing the brunt of the increases having seen a £29 (4%) spike in prices compared to 12 months ago. The average female driver can now expect to pay £737 for their car insurance, on average. However, this is still significantly cheaper than male drivers, who pay £821 in comparison, following a £19 (2%) increase in prices year-on-year, on average. This brings the gap between the two to £84, on average(3).
Although it isn’t just female drivers who are bearing the brunt of the increases. Younger drivers have been hit hardest by the increases. In particular, prices for drivers aged 23 are now £45 (4%) more expensive than 12 months ago. This means drivers of this age will now pay £1,306 for their car insurance, on average. Similarly, the average price for 19-year olds increased £42 (2%) in 12 months to £1,938. According to the data, this is one of the most expensive ages for car insurance, topped only by 18-year olds who pay £2,067, on average.
While car insurance prices are on the up, drivers can breathe a sigh of relief as the sting of other motoring costs starts to ease. Fuel, in particular, has dropped slightly, following a sharp increase earlier this year. Since May, the average price of petrol in the UK has dropped by 2p per litre, while diesel prices slump by 3p. Confused.com’s fuel price index shows that petrol now costs 127.9p per litre, and 131.5p for diesel(4). But while prices are dropping for now, these prices are still extremely high in comparison to recent years. And trends suggest the cost of fuel could soon accelerate, leaving motorists with another expensive burden.