UK motorists have seen insurance prices rise by £64 in January after new rules designed to make pricing fairer were introduced at the start of the year. That’s according to price comparison site CompareTheMarket.com, which says the average premium now stands at more than £700 as insurers increase premiums.
The news comes after the Financial Conduct Authority (FCA) announced new rules designed to prevent loyal customers being overcharged for insurance. In essence, the FCA said it was concerned that firms were offering new customers lower prices to entice them in, then charging them more as they renewed their cover.
However, the rules introduced on January 1, 2022, were designed to put a stop to that by banning insurers from charging existing customers more than the equivalent new customer would pay. The organisation recognised, however, that this change could cause prices to rise for some customers, and it says it is “keeping a close eye on how insurers respond to new rules”.
It seems fears surrounding price increases are well-founded, with CompareTheMarket.com’s analysis of its own data shows the average premium is now £700 – up £64 on the same time last year. On a weekly basis, the company says the average premium has gone up by £42, rising from £679 in the first week of January to £721 in the second week.
At the same time, the average cheapest premium quoted on the site has risen to £573, up from £541 a year ago. And by the second week of January, the cheapest premium typically available had risen by £31 compared with the previous week.
Ursula Gibbs, CompareTheMarket.com’s director, said the savings from switching could fall “significantly” after the rule change, and customers near the end of their policy should shop around quickly before prices rise again.
"Our research shows the cost of car insurance is rapidly accelerating in January,” she said. “The average premium has jumped £64 year-on-year. The cheapest deals available are also becoming more expensive so drivers will need to be quick if they want to secure a great price. The savings available to customers looking to switch could reduce significantly as more insurers hike their prices. If your policy is coming up for renewal, it is a good idea to shop around for a better deal as soon as possible. There is a brief window for savvy drivers to get this year's car insurance at last year's prices."