This is the biggest annual percentage decrease since 2014 and follows a two-year-long upward trajectory in prices from 2021 to 2023, according to the longest established and most comprehensive car insurance price index in the UK. Car insurance premiums have now fallen for four consecutive quarters following price drops of 5% (£54) in the first three months of 2024, 6% (£59) in the second quarter and 2% in the third quarter.
Source: WTW / Confused.com Car Insurance Price Index. *Average values rounded to the nearest whole number.
Tim Rourke, UK Head of P&C Pricing, Product, Claims and Underwriting at WTW, said: “Lower levels of inflation and sustained reduced motor claims frequency in 2024 allowed insurers to continue to drop rates for consumers, who have endured dramatic rises since the pandemic. While motorists will be hoping for further declines in 2025, how insurers navigate evolving market forces like the whiplash tariff review, the newly-established motor insurance taskforce and wider economic pressures will be critical as they seek to manage costs and support customers.”
All regions across the UK recorded significant price falls of over 10% in insurance premiums over the last 12 months. Drivers in Manchester and Merseyside saw the largest percentage decrease in the cost of comprehensive car insurance, where drivers saw an annual fall of 19% (£235), taking their premiums below £1,000 on average for the first time in 18 months to £998. Drivers in Inner London also benefited from a price fall just short of 19%, with annual premiums decreasing by £299 from £1607 to £1308. The smallest cut in premiums was seen in the Scottish Borders, where drivers saw an annual decrease of 10%, with average prices now costing £590.
South West England continues to be the cheapest region for car insurance, with average premiums now costing £558, and Inner London remains the most expensive area. The West Midlands has replaced Manchester/Merseyside as the most expensive region outside of the capital, despite average premiums falling by 17% during the last 12 months and now costing £1,015.
Source: WTW / Confused.com Car Insurance Price Index. *Average values rounded to nearest whole number.
More locally focused data shows motorists in Oldham experienced the greatest annual fall of 21% (£291), where premiums on average now cost £1065. West Central London continues to be the postcode area with the steepest prices in the country, despite a £205 (11%) drop in prices compared to one year ago, where drivers now pay an average bill of
£1,731.
While all age groups experienced a fall in prices during the last 12 months, younger drivers benefited from the biggest savings. Following a 18% reduction in premiums, 18-year-olds are now paying £557 less compared to 12 months ago, at £2605 on average. Meanwhile, drivers aged 20 also saw a significant annual price drop of £467 (18%), reducing their average premiums to £2061. At the other end of the spectrum, drivers aged 51 experienced the smallest decrease in prices with a fall of 12% (£97) and an average premium of £699.
Steve Dukes, CEO at Confused.com comments: "New policy prices have been decreasing steadily for 12 months, and we're now seeing a significant shift in prices compared to last year. We're also seeing significantly different approaches between insurers, which means for customers it's a great time to be shopping around and for ambitious insurers it's an opportunity to grow. As the market remains highly competitive on price, insurers are increasingly using data to inform and monitor their own specific growth strategies."
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