MOTOR PREMIUMS HIT SEASONAL SEVEN-YEAR LOW AHEAD OF NEW INSURANCE RULES
- Cost of car insurance falls by an average of £80 year-on-year in Q4 (Sep-Nov) to £640 – the cheapest average price for the three-month period since 2014
- Premiums are lower than in previous years as insurers compete to attract new customers before new regulations come into force in January 2022
- Cheapest premium typically available drops to £537 – so drivers could save an average of £102 by switching to a better deal instead of auto-renewing
- Young drivers could save on average £298 on their policy by shopping around
29 December 2021 – The average annual car insurance premium declined by £80 year-on-year in Q4 (September – November), according to the latest Premium Drivers research from comparethemarket.com. The average premium is now £640, compared to an average of £721 for the same three-month period in 2020. The decline in the insurance prices also means this is the cheapest Q4 average for car insurance since 2014.
The recent cost of car insurance has tumbled from previous years, suggesting insurers have kept the cost of policies low to attract new customers ahead of the introduction of the Financial Conduct Authority (FCA) pricing regulations in January 2022. These rules prevent insurers from offering discounts exclusively to new customers. While the regulations are designed to stop existing customers from being penalised for loyalty, insurers may then choose to increase premiums for new and existing customers from January to make up the difference.
| Time | Average Premium | Cheapest Quoted Premium | Price Difference |
|---|---|---|---|
| Sep – Nov 21 | £640 | £537 | £102 |
| Sep – Nov 20 | £721 | £606 | £114 |
Cheapest quoted premiums have also declined to £537 - a £68 drop year-on-year. This fall in the cheapest premiums has driven up savings available to motorists. Drivers can potentially now save £102 by shopping around for the cheapest deal. This also means motorists could pay £183 less for their insurance than the average for the same time last year by switching to the cheapest quoted premium.
Young motorists could benefit from the biggest savings by switching car insurance. The average premium for drivers aged under 25 stands at £1,205 (September – November 21). However, if young drivers shop around for the cheapest deal when their policies come up for renewal, they could typically save £298 by switching.
Recent research from comparethemarket.com shows that insurance prices for all motorists can be £306 cheaper on average by switching 20 days before the end of a policy compared to the day of renewal. However, drivers should also be aware that while the average car insurance premium is cheaper in Q4 year on year, on a monthly basis, the average car insurance premium has started to increase gradually from £622 in August to £689 in early December. While this is a typical seasonal trend, the usual subsequent decline in premiums in January may not happen this year if insurers decide to stop discounting due to the new regulations.
Drivers can use comparethemarket.com’s premium tool to check if they are paying too much for their insurance based on their age, location, and the value of their car.
Ursula Gibbs, director at comparethemarket.com, said:
"Motorists will be glad that premiums are cheaper than last year but there is a sense of 'buyer beware'. It looks like insurers have been keeping premiums lower as part of a clever pricing game to try and lock in as many customers as possible before new regulations are introduced in January. Our figures suggest motorists could lose out if they auto-renew their policy; by switching to the cheapest premium instead, motorists could save around £100 and young drivers could see even bigger savings of almost £300. These savings gained by those drivers switching their provider could also help to offset the current rising cost of living.
"However, there is uncertainty over what will happen to the cost of car insurance next month. While the rule changes should end the loyalty penalty, this does not mean that auto-renewing your insurance will get you the best deal. People should be careful not to fall into any traps as insurers may decide to hike premiums for a large number of customers if they can't charge existing customers more. Though the size of any price increases for motor insurance may be limited if more Omicron travel curbs come into force. One of the best ways to beat any potential price increase is to switch early. You could save more than £300 on car insurance by shopping around roughly 20 days before your renewal, rather than leaving it to the last minute."
Notes to editors:
Methodology
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.
About comparethemarket.com
comparethemarket.com was launched in 2006 and has grown rapidly over the past fifteen years to become one of the UK’s leading price comparison websites.
comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as credit cards and loans.
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comparethemarket.com is a trading name of Compare The Market Limited. Registered in England No. 10636682. Registered Office: Pegasus House, Bakewell Road, Orton Southgate, Peterborough, PE2 6YS. Compare The Market Limited is authorised and regulated by the Financial Conduct Authority for insurance distribution (Firm Reference Number: 778488). Energy and Digital products are not regulated by the FCA.