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Car Insurance Market Uk – The fall in UK real disposable income from the end of 2021, marked by a CPI of 9.1% to May 2022, will have significant implications for the motor insurance sector, writes Ben Carey-Evans, senior insurance analyst, for GlobalData.
British car insurance is in crisis. With most consumers paying less than £400 a year for motor insurance in 2021, according to GlobalData, four decades of high UK premiums will come under pressure from inflation.
Car Insurance Market Uk
British price comparison website CompareTheMarket.com found that the average cost of insurance for 10 popular car models rose by £100 between March and May 2022 compared to the same period in 2021. This will be a concern for customers already struggling with the economy. According to GlobalData’s 2021 UK Insurance Consumer Survey, 66.9% of UK consumers paid less than £400 a year for car insurance in 2021, and 78.6% paid less than £500 he paid
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While young drivers facing high premiums is a long-standing story, only 6.8% of consumers paid more than £1,000 a year in premiums in 2021. This will undoubtedly increase as inflation hits consumers in different ways
Recent rules by the Financial Conduct Authority (FCA) that prevent insurers from offering new customers lower prices than they pay to existing customers could, in theory, reduce the switch. As the lifestyle crisis continues, we expect consumer buying to increase. After all, they will prioritize quality in this market.
This could lead to increased turnover at renewal time, with more consumers using price comparison sites and looking for the best deals. Traffic insurance lines are mainly influenced by prices. Because it’s a must-buy for drivers, many consumers don’t look beyond the home page of price comparison websites. GlobalData’s results show that 30.7% of car insurance consumers switched insurance policies in 2021, and 77.8% did so specifically because the new policy offered cheaper premiums.
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The Rising Cost Of Uk Car Insurance
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Therefore, we will see more change in 2022 – and a clear change in price as a result – as higher inflation affects the insurance market.
We are also seeing increased efforts to lower premiums, such as increasing the use of telematics or even mileage insurance. These are usually offered by startups (eg UK insurance broker Buy Miles), so this pricing pressure can be a good opportunity for challengers to establish a presence in the market.
Sign up for our daily news list! Jumpstart your business with our industry leading insights. Jumpstart your business with our industry leading insights. Closer Young drivers have been hit hardest by the highest car insurance costs, with premiums of nearly £3,000 reported.
Young Drivers Face £3,000 Cost For Car Insurance
Confused.com, a price comparison company, said the average 17-20 year old saw their insurance costs rise by more than £1,000 compared to the same period last year.
Steve Dukes, CEO of Confused.com, told Radio 4’s Today programme: “The frequency of claims has increased in recent years since the pandemic, but so have their costs.
“Used car prices are higher than ever, parts costs, repair labor costs, and all of that is being passed on to the consumer.”
Used car prices – the typical first vehicle for a newly qualified young driver – have been volatile since the months of the Covid pandemic. Demand for used cars has increased as new car production has slowed due to global shortages of computer chips and other materials needed for production.
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In March 2022, price growth in the used car market peaked at 31%, according to the Office for National Statistics. They have dropped a lot since then.
But young drivers face the sharpest jump. For 17-year-olds, premiums rose by an average of £1,423 to £2,877. For drivers aged 18, the average policy price came to £3,162.
The data is calculated as an average of the top five quotes found on Confused.com, rather than the actual price paid for the policy.
Mr Dukes said there are ways to reduce premiums. “Where they can legitimately share a driver with an older more experienced driver and add that person as a named driver, that can have a big impact and bring the price down by hundreds of pounds, it’s really worth looking at,” he said.
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Mr Dukes advised young drivers to use telematics, third-party insurance or ‘pay-as-you-drive’ insurance, where their behavior on the road is shared with the underlying insurer or occasional driver policy.
But he said the rise in prices for 17-20-year-olds will make them look at whether many younger drivers are driving.
“The industry needs to be careful about pushing young drivers to other modes of transport and there is a real risk when prices are so high,” he said.
The Association of British Insurers (ABI) says that although car insurance can be expensive, there are ways to reduce costs. , foreigner
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He added that it was important for motorists to never drive without cover and urged anyone struggling with the costs to speak to their insurers.
However, the ABI says that insurance is always risk-based and data shows that average costs and frequency of claims are higher for younger drivers, which can affect premiums.
According to the ABI’s own analysis of 28 million policies, insurance costs for drivers rose by an average of £561 between July and September, up 29% on the same period in 2022.
The association said the figures were based on the price consumers paid for their coverage, rather than what was quoted.
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This section covers the key market trends shaping the UK car insurance market according to our research experts:
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The average cost of comprehensive car insurance has been significantly affected in recent years. For example, the average cost of comprehensive car insurance fell to GBP 436 (USD 524) in the first quarter of 2021, from GBP 468 (USD 563) in the fourth quarter of 2020, according to data published by the Association of British Insurers. Premiums fell to GBP 416 (US$500) in the first quarter of 2022 from GBP 440 (US$529) in the fourth quarter of 2021. This volatility is mainly due to the impact of the COVID-19 pandemic in 2020 and 2021. Blockades imposed by local authorities have reduced the total distance traveled during this period, resulting in fewer fatalities. However, premium prices will rise in the last quarter of 2022 due to inflation and rising costs of paint, spare parts and other repairs.
The UK is the second destination for fintech investments after the US. The UK remains Europe’s most attractive fintech destination, with investment in the sector growing to £9.1bn in the first half of this year, up 24% on the same period in 2021. Of the more than 1,600 companies that make up the UK fintech sector, a number will double jobs in the UK economy by 2030.
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