MOTOR PREMIUMS HIT £680 IN JANUARY - DRIVERS NEED TO ACT FAST TO SAVE AS MUCH AS POSSIBLE ON INSURANCE FOLLOWING FCA CHANGES
- Average cost of car insurance has already jumped by £43 year-on-year to £680 in the first week of January as many insurers hike prices and further increases are expected
- Some insurers have yet to implement price increases for new customers following new regulations coming into force
- Drivers have a short window to save on their car insurance by switching now before anticipated premium rises across the board
12 January 2022 – Drivers have a short window to save on their car insurance by shopping around for the cheapest deal, according to the latest insight from comparethemarket.com, before premiums are likely to rise sharply across all providers later this month.
The cost of car insurance has recently rocketed as many insurers have hiked premiums for new customers following the introduction of the Financial Conduct Authority (FCA) pricing regulations on 1st January 2022.
Despite the new regulation, some insurers have not yet hiked premiums and are even choosing to decrease their existing prices in the short term potentially to attract new customers. However, these providers are expected to increase prices for new customers very shortly.
Motorists therefore have a brief period of time to save hundreds of pounds before the remaining insurers finalise their prices for new customers.
This means there are still substantial savings available to motorists who switch soon, but any savings are likely to be smaller in the coming months.
The average annual car insurance premium has already risen by £43 year-on-year in the first week of January. The average premium for the first week of January 2022 is £680 – significantly more than the average for January 2021 which stood at £636.
The new FCA rules prevent insurers from offering discounts exclusively to new customers. While the regulations will benefit existing customers by ensuring they are not penalised for loyalty, many insurers have chosen to increase premiums for new customers following the regulations coming into force.
Ursula Gibbs, director at comparethemarket.com, said:
"The FCA changes are good news for loyal customers who have endured years of rising prices, however people still need to make sure they are being savvy when it comes to their insurance costs. Motor insurance costs are already up over £40 year on year and it’s only the second week of January. The main worry is that the level of savings which are currently available to people who are looking to switch insurance provider imminently could reduce significantly in the coming weeks.
“Motorists need to be quick if they want to make the most of current low prices for their car insurance. Our insight shows some insurers have already hiked prices across the board as they can no longer charge existing customers more money than new customers. Not all insurers have made the change immediately, but it is likely that prices could rise across all providers as insurers adapt to the new regulation. This means there is a brief window for drivers to get this year's car insurance at last year's prices."
Notes to editors:
All data is sourced from comparethemarket.com.
When the “average price” is referred to, this is the mean average of the top five cheapest prices presented to a customer, where a consumer has clicked through to buy. Buying from the top five cheapest prices presented represents 90% of all car insurance sales. When the “cheapest price” is referred to, this is the average cheapest price presented, where a customer has clicked through to buy.
Premium Drivers calculates the cost of premiums where the customer has clicked through to buy the policy. If the average premium cost was instead calculated on the basis of all prices returned then the average cost would be significantly higher.
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