The recent cost of living bulletin from the Office for National Statistics indicated a slowdown in inflation to 7.9% in June, driven by a notable drop in petrol and diesel prices by over 20%. However, a closer look at the data reveals a concerning trend: car insurance prices have surged by a significant 50.9% in the last 12 months.
According to market research firm Consumer Intelligence, the average car insurance quote has seen a substantial increase of 34% in the year leading up to May. The rising costs have affected different age groups differently, with under-25s experiencing the highest impact, facing an average policy cost of £2,145. Those aged between 25 and 49 are paying an average of £850, while the over-50s group is facing an average cost of £568. For new drivers, there's additional bad news as there are fewer telematics policies available, which are typically more affordable.
Amidst higher food and energy costs, consumers are expressing concerns that they are being taken advantage of to boost insurers' profits. However, experts argue that the car insurance sector operates on slim profit margins, and many companies were caught off guard by the significant increase in claims costs during 2022. As a result, they are now trying to recoup losses by raising premiums.
With September being a significant month for renewals due to new car registrations, Ian Hughes, the chief executive of Consumer Intelligence, warns that Britons returning from their summer holidays might face a major shock when renewing their car insurance policies.