Average UK insurance premiums rose by £76 year-on-year during the first two weeks of February, according to a leading price comparison website. CompareTheMarket.com says continued price rises will be a worry to consumers faced with a notable increase in the cost of living.
According to the price comparison site’s data, the average insurance premium in the first two weeks of February was £689 – up from £613 over the same period last year. At the same time, the average cheapest premiums rose from £519 last year to £570 in February – an increase of £51.
CompareTheMarket.com says the price difference means drivers could save an average of up to £119 a year by shopping around. That has increased from £94 during the first two weeks of February 2021, despite the introduction of new rules surrounding introductory pricing.
The news comes just two months after the Financial Conduct Authority (FCA) introduced new rules to make car insurance pricing fairer. The regulator aimed to prevent a “loyalty” tax for customers who stuck with an insurer by preventing companies from offering lower prices to new customers.
When the rules were introduced, the FCA said the measures would save consumers an estimated £4.2 billion over the next 10 years. However, that figure is based on the measure applying to both home and car insurance policies.
Alex Hasty, the director at CompareTheMarket.com, said the latest figures would be concerning to motorists, especially in light of the rising inflation, increasing energy costs and soaring petrol prices. He urged customers to shop around despite the FCA’s new rules, saying consumers could save more than £100 by doing so.
"Motorists will be concerned that the cost of car insurance has jumped from last year,” he said. “Our figures show drivers will now have to pay an average of £76 more for their policy. This increase will put yet more financial pressure on many households whose budgets are being squeezed by the cost of living crisis with rising inflation, surging energy costs, and higher petrol prices.
“For any drivers who are worried about this upswing in car insurance prices, we recommend shopping around for a cheaper deal ahead of your renewal. Motorists could typically save more than £100 by switching to one of the cheapest insurance providers which could offset the increase in premium costs or be put towards fun things like a cinema trip and a meal out with friends and family.”