Motorists have been issued a stark warning after car insurance prices increased by around £157 over the last year.
Based on analysis from the Association of British Insurers, the typical price paid in the first quarter of 2024 was £635.
In the first quarter of 2023, the average premium paid for private comprehensive motor insurance was £478.
The ABI’s motor insurance tracker analyses nearly 28 million policies sold a year and the claims paid against policies.
The association has previously cited costs such as energy inflation, rising prices for paint and other raw materials, rising courtesy car costs and the increased cost of second-hand cars as adding to overall cost pressures.
Over the longer term, motor insurance has tracked very close to inflation, the association said.
In real terms, prices are £8 or 1.3% higher when compared to a previous peak at the end of 2017, according to the ABI. This is partly because prices fell significantly during the coronavirus pandemic, it said.
It added that 2023 was a “difficult year” for motor insurance margins, and that since 2017, costs for insurers to pay claims have increased by 23% in real terms.
Mervyn Skeet, the ABI’s director of general insurance policy, said: “We understand that car insurance costs are putting pressure on household finances. These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable.
“Even though these figures demonstrate a slowdown in price increases, we won’t be taking our foot off the gas when it comes to our work on tackling the cost of cover.”
The ABI previously set out steps that the industry is taking to combat the rise in the cost of motor insurance in February. Last week it announced that its members had agreed a set of aimed at helping to manage the costs for people paying for insurance on a monthly basis.
The association said it recommends that anyone struggling with the cost of their cover speaks to their insurer.
Earlier in April, Treasury Committee member Dame Angela Eagle told a hearing into insurance: “My constituents and many people who write to the committee feel that insurance is becoming more of a rip-off.
“Because the price is going up, it’s harder to make a claim; people, when they do make a claim, often have to wait a very long time or aren’t dealt with very fairly.
“And that’s particularly the case for insurance that’s compulsory, such as driving insurance.”
Matt Brewis, director of insurance at the Financial Conduct Authority (FCA), told the committee the regulator has been looking at evidence of how inflation has impacted the motor sector.
He said the regulator is meeting with price comparison websites, brokers and consumers “to understand the concerns of consumers and where they are seeing issues”.
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