Recent premium insights on cars provided by WTW and Confused.com
**UK Car Insurance Premiums Drop by 16% Over the Past Year**
The latest data from Confused.com reveals a significant decline in comprehensive car insurance premiums across the UK, with the average premium now standing at £757 – a drop of 16% or £144 over the past 12 months. This continued downward trend reflects a decrease of 2% (£21) in the last three months alone, as the average premium was down from £777 in September 2024.
The price correction in the car insurance market is primarily driven by strong competition among insurers, who are lowering rates to maintain scale and stay competitive amid consolidation trends in the UK insurance market. In addition, innovation in pricing models, such as telematics usage-based insurance, is shifting premium calculation from traditional risk factors to actual driving behavior.
According to the WTW/Confused.com Index, drivers in the West Midlands saw the largest percentage decrease in the cost of comprehensive car insurance, with an annual dip of 18% (£201). Oldham followed closely behind, with a 21% (£250) drop since May 2024, while drivers in Manchester/Merseyside benefited from a similar percentage drop at just under 18% (£192). Central and North Wales followed closely behind as the second cheapest region, with average premiums at £524.
Steve Dukes, CEO at Confused.com, emphasized the need for the industry to look at the underlying cost of providing insurance from every angle to tackle the long-term upward trend in pricing. He stated that insurers are using data to reduce prices to remain competitive.
Despite the recent decline, comprehensive car insurance premiums are still considerably higher than they were five years ago. Llandrindod Wells remains the cheapest town in the UK with average premiums of £481, while Inner London saw a 24% (£446) drop in average premiums from £1,856 to £1,410.
The rise of electric vehicle (EV) ownership, especially in London and Southeast England, is gradually increasing the market size and influencing premium models over the longer term as EVs have different repair and risk profiles. Other factors impacting premiums include general inflation, rising vehicle repair costs, and supply chain disruptions, which have increased insurers' costs. However, advances in AI for claims automation and fraud detection, along with enhanced legal enforcement of compulsory insurance obligations, are expected to have a moderate impact on premiums in the medium term.
The continued evolution of the UK comprehensive car insurance market is expected to be influenced by greater EV adoption and technology integration affecting premium calculations in the medium to long term.
- The deciphered data shows that the UK's motor insurance industry has experienced a decrease in premiums due to advanced technology and reduced competition.
- Innovations such as telematics and usage-based insurance models in the insurance sector have shifted the focus from traditional risk factors to actual driving behavior, thus lowering premiums.
- As the finance and banking-and-insurance sector adapts to data and cloud computing, insurers are utilizing this data to reduce prices and gain a competitive edge.
- The growth of electric vehicle (EV) ownership is changing premium models in the car insurance market, with London and Southeast England seeing significant shifts due to the uniqueness of EVs in terms of repair and risk profiles.
