Car insurance premiums start to FALL – but are still up 48% in two years

Car insurance premiums are showing signs of falling – but still remain at near-record highs.

The average driver paid £622 a year for motor cover from April to June 2024, according to the Association of British Insurers trade body, 2 per cent or about £12 less than they paid in January to March. 

It is the first time premiums have fallen for more than two years.

However, the April to June 2024 figure is 21 per cent higher than the same period in 2023, and much higher than averages of £470 during those months in 2022.

It costs 48 per cent more to insure the average car now than two years ago, when the typical premium was £430.

Car insurers say premiums have had to skyrocket to pay for their inflated costs, such as more expensive motor repairs, claims costs and rising thefts.

The ABI’s car insurance figures are the most accurate, as they are based on actual premiums paid, whereas many other indices use premium quotes instead. 

The slight drop in car insurance prices now is due to a slowdown in claims costs, the ABI said.

 The trade body often points out that insurers paid out £1.13 in claims in 2023 for every £1 collected in premiums, according to consultants EY. 

However, critics say these premium hikes defy the fact that the single biggest thing that car insurance premiums pay for – bodily injury claims – are falling.

They also point out that the £1.13 figure above does not include the money insurers made from investments, which can be massive.

Labour has said it is determined to crack the ‘spiralling cost’ of motor insurance premiums. 

ABI director of general insurance policy Mervyn Skeet said: ‘After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as claims costs stabilise. 

‘While this is good news, we need to continue our work focusing on claims costs, for the good of consumers. It remains a top priority for us and our member insurers.’

Young drivers are the group hit hardest by high premiums.

Official figures show that 6,316 drivers aged 17 to 20 were convicted of driving without insurance in 2023. 

That is up 117 per cent on the 2,902 instances recorded in 2021 – and 15 per cent higher than the 5,486 convictions for the age group in 2022.