Press Release

UK car insurance premiums see 8% annual rise

A second consecutive quarterly drop in prices however represents a deceleration and bucks the recent strong upward trend

January 22, 2018
| United Kingdom

LONDON, Monday 22 January 2018 — UK motorists are now paying on average £60 more than they were this time last year for a comprehensive car insurance policy, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson. In the final quarter of 2017, however, prices fell by an average of 1.3%, which is the largest quarterly reduction in premiums seen in more than three years.

According to the Index, which is based on price data compiled from almost six million customer quotes per quarter, this is also the second consecutive quarterly drop in prices, bucking the recent strong upward trend which saw the average premium rise from £579 in June 2014 to the price peak of £847 in June 2017.

This latest fall in premiums, one of only three quarterly reductions seen since September 2014, means that the average comprehensive premium is now £827 per year, or £11 lower than in September 2017. While average premiums rose by £60, or almost 8%, over the last 12 months, this represents a significant deceleration compared to recent Index results which have recorded an average year-on-year increase of £110 for the previous six quarters.

According to Willis Towers Watson, the reduced prices this quarter continue to reflect insurers’ reactions to last year’s announcement of a proposed change in the calculation of the Ogden discount rate, which determines the basis of settlement and so cost to insurers of the very largest personal injury claims. The monthly version of the Index shows that premiums fell earlier in the quarter but this was followed by a slight counterbalancing increase slightly towards the end of that period, which occurred after the government’s announcement on 30 November for a delay in changes to the discount rate.

Stephen Jones, UK Head of P&C Pricing, Claims, Product and Underwriting at Willis Towers Watson, commented: “While the second quarterly drop and annual deceleration in premiums will be positive news for drivers, the marginal price increases seen at the end of the year suggest a level of uncertainty and volatility will continue to trouble the market into 2018, particularly concerning the impact of ongoing developments relating to Ogden.”

In contrast to results from Q3 2017, when the majority of age groups still experienced double digit percentage increases compared to the same period in 2016, most drivers in the final quarter of 2017 benefited from a significant deceleration in their average annual premiums. Female insured-only drivers aged between 56-60, for example, saw the annual increase of their premiums drop from 18.8% to 2% in the last three months. For the first time in two years, some drivers even benefited from an annual drop in premium prices, with male drivers aged 66-70 who have an additional two drivers or more on their comprehensive policy seeing their premiums cut by 2.7%, equating to an average annual premium cut from £758 to £738.

Across the country, the fall in prices experienced by most regions over the third quarter of 2017 continued in to the last three months of the year. The biggest quarterly reduction, of 8.9%, was seen in the Scottish Borders, reducing average annual premiums to £623. One or two regions did buck this trend, with drivers in the North Midlands and East/ North-East of Scotland experiencing quarterly increases of 1.3% and 2.3% respectively.

The biggest annual decrease in prices were felt in East London, where annual motor insurance prices fell on average by -0.8% from £1545 to £1471. Highlighting the fluctuating premiums drivers face depending on where they live, drivers in neighbouring City of London were hit by the highest annual increase of 33.4%, taking their average premiums to £1599 and, for the first time since 2009, making it the most expensive location in the country for car insurance. The cheapest place for motor insurance in the UK is Llandridod Wells in Wales, where drivers were paying an average of £574 at the end of 2017 for comprehensive car insurance.

Stephen Jones noted: “After a tough year for insurers in 2016, motor insurers saw an uplift in prospects following last year’s proposed Ogden rate revision. However, insurers still face a number of uncertainties in 2018, including the risk that Brexit negotiations will push the Civil Liability Bill into the slow lane, which may also impact the timing of changes to the discount rate. In addition, there is always the possibility of further increases in Insurance Premium Tax, and ongoing pressures on repair costs from the weakness of Sterling and increasing repair complexity.”

Louise O’Shea, CEO at Confused.com, said: “Based on the current 8% year-on-year rise we expect average comprehensive premiums to exceed £900 by the end of this year. Despite the quarterly drop we have already seen volatile pricing, with the latest figures showing a 0.4% increase in December. We also anticipate a reinsurance rate increase following last year’s Ogden rate drop, which will further impact the direction of prices.”

About the index

The index is compiled using anonymous data from all enquiries submitted on Confused.com. The prices used for analysis are based on an average of the best five quotes received.

About confused.com

Launched in 2002, Confused.com was the UK's first price comparison site for car insurance and is one of the UK’s biggest and most popular price comparison services, generating over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include small van insurance, motorcycle insurance, car buying, and car finance, as well as a number of tools designed to save drivers money on motoring.

Confused.com is not a supplier, insurance company or broker. It provides an objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com’s service is based on the most up-to-date information provided by UK suppliers and industry regulators.

Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is authorised and regulated by the Financial Conduct Authority.

About Insurance Consulting and Technology

Willis Towers Watson’s Insurance Consulting & Technology business has over 1,200 colleagues operating in 35 markets worldwide. It is a leading provider of advice, solutions and software – primarily to the insurance industry. Its consulting services help clients manage risk and capital, improve business performance and create competitive advantage – by focusing on financial and regulatory reporting, enterprise risk and capital management, M&A and corporate restructuring, products, pricing, business management and strategy.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving in more than 140 countries. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance.