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Will car insurance keep increasing in 2024?

11/01/2024


With many people already seeing a steep car insurance increase in 2023, drivers can expect to see a further squeeze on their wallets with an 11% car insurance price increase forecast for 2024 according to the latest report by professional services firm EY. See how you can get ahead and keep your premiums down in 2024.


Why will the price of car insurance increase in 2024?

It’s no secret that many households in the UK have been feeling the pinch of rising costs in recent years on their finances. From lockdowns to the increased number of conflicts, strains on global logistics and supply, and a rise in the cost of living overall, consumers have been paying the price for such economic disruptions. These turbulent factors have also negatively influenced many sectors in the UK, and the car insurance rise in premiums has been no exception. Car insurance cost statistics from the Association of British Insurers (ABI) show that the average motor insurance policy in the UK was £561 across all providers as of June 2023.This is a 29% increase in the average cost of a motor policy compared to the same quarter of 2022.

Insurers have been implementing car insurance price increases rapidly since 2022 due to a variety of factors impacting car insurance premiums. Insurers enjoyed a period of profitability during the pandemic when insurance premiums continued to be paid and claims were very low due to lockdowns, so why has car insurance gone up?  Well, insurers have since fallen on tougher times. According to Rodney Bonnard – UK Insurance Leader at EY, the profitability of insurers has been negatively impacted by the following factors:

  • Pricing reforms
  • High inflation
  • Logistics and supply chain issues
  • Changing driving habits

Another factor why UK insurers have been raising their prices can be attributed to the large number of claims in 2022 and 2023. UK motor insurance analysis revealed that insurers in the UK paid 10% more on claims than what they made on premiums during 2022 and faced a continued increase in the volume of claims for 2023, up 29% in the second quarter alone.

The increase in claims and the resulting payouts for these years have been attributed to increased weather-related damage claims, increased pothole damage, and increased rates of theft particularly for high-end vehicles. The increasing presence of expensive electric cars on UK roads as well as the prolonged shortage of semiconductor chips have all contributed to insurers paying out more on claims. Additional costs to counter the increasing number of fraudulent claims being made in the UK have also been a large expense to insurers as part of a renewed effort to stamp out its negative impact on the industry and premium payers alike. Insurers have also been pushing for more rigid approaches to dealing with claims and to effectively reject cash compensation in order to prevent exploitation. While good in the long run for honest policyholders, it does mean that insurers will be forking out more in tackling fraud, leading to increased premium costs in the short term as insurers recover the costs.

This dramatic increase in the volume of claims, coupled with all the other above-mentioned factors, has led to insurers being forced to raise their premiums considerably in order to remain profitable. The Association of British Insurers (ABI) reports that 2023 experienced the highest increase in premiums since their records began in 2013.

Who is most affected?

Whilst everyone has felt the pinch of increasing premium costs it is likely that Young drivers will be the ones left worst off. Car insurance premiums for young drivers have risen by a whopping 50% putting huge pressure on learner drivers attempting to get on the road. This coupled with the increasing cost of living impacting the affordability of households and the increased prices of driving lessons have all made it much tougher for younger UK motorists.

Young drivers have faced a steeper increase year on year compared with other age groups since the pandemic.

YEAR18 Years Old21 Years Old
2021£1105£1109
2022£1125£1066
2023£1207£1195
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*These young driver car insurance cost statistics use a random sample of over 40,000 car insurance policies throughout 2022/23 across the UK, within the 17-24 age group

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Whilst young people have likely been the most impacted by the increase in motor insurance premiums, the fact remains that the past few years have been hard on the budgets of all age groups in the UK. Unfortunately, most reputable predictions indicate that the rising costs of car insurance will continue in car insurance trends for 2024. These costs will likely continue to increase before flattening in 2025, according to advisory firm Oxbow Partners.

Average UK premium by age group analysis18-2425-3435-4445-6465+
Q1 2023£1139.59£774.31£625.17£424.13£364.84
Q2 2023£1177.53£822.11£634.47£437.81£392.5
Q3 2023£1260.49£886.44£711.65£502.3£450.4
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*These findings are based on average calculations – based on a sample of 100,000 policies – premium prices will vary depending on the individual circumstances of the policyholder in question.

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How much will car insurance increase in 2024?

Many financial and consultancy reports suggest UK car insurance premiums will experience an increase between 10% to 12.6% in 2024. This is of course assuming that the current factors impacting the increase in car insurance remain constant. It is important to remember that changing circumstances and further economic disruptions could mean this figure may end up being higher.


*27% of survey respondents claimed to have had an increase of more than £125 in their car insurance premiums in 2023


How to save on car insurance in 2024

Whilst avoiding an increase in your premiums for 2024 is unfortunately unlikely, you can still avoid paying more than you need to. Here are some of the things you can do to help keep your premiums down and take off the pressure of rising costs.

  1. Compare quotes – By comparing multiple insurance companies you are exposing yourself to more variety and potential deals. Insurers compete with each other and don’t always evaluate driver risk factors equally. This means that while one insurer may be hesitant to offer cover or charge a higher premium, another may be perfectly willing to insure you and also offer a competitive price on your premium. Whilst insurers are no longer allowed to offer better deals to new customers over those who auto-renew existing policies, it is still not recommended to simply let your policy auto-renew. This is because you may be missing out on better deals offered by other insurers if you simply stay with your current insurer and don’t do a price comparison. 51% of consumers could save £504.25 on their Car Insurance with Quotezone. We have compiled a large panel of 110+ UK-based insurance providers, making it easy for you to compare the market in minutes. Remembercomprehensive insurance in some cases can actually be cheaper than third-party only, so compare multiple coverage levels also.
  2. Timing your renewal – Drivers who are hard-pressed for coverage and need it fast are likely to be charged more on their premiums. That’s why it pays to compare policies early, usually between 2 to 3 weeks before your policy is due to renew. This can help you save considerably on your quotes from insurers.
  3. If possible pay annually – Paying for your car insurance annually may mean you need to pay more upfront but it will actually save you money in the long run. By signing up for monthly direct debit payments you will be entering a credit agreement. This means that you’ll be paying interest on your coverage so your annual premium will actually be more expensive than if you pay for the year upfront.
  4. Consider black box insurance – This can be a fantastic option if you are a younger driver looking to show insurers you are responsible and deserve a lower premium. Black box, or telematics insurance, essentially sends data to the provider on how fast you typically drive, what time of day you use your car, and if you are engaging in risky driving such as sudden breaking. This can all lead to a fairly generous discount if your black box shows you are a responsible driver. The average annual premium of a 18-24 year old in 2023 with a black box insurance policy was £1155. This is in contrast to an average cost of £1230 for drivers of the same age without telematics insurance.
  5. Add a named driver – If you aren’t keen on the idea of black box insurance, you can alternatively add a named driver to your policy. Depending on whether the added driver has held their licence for a while and has a clean driving history, this can help younger drivers save on their premiums. Be sure to be honest about who will be the main driver of the vehicle. Being dishonest about who will be the main driver to get cheaper insurance is known as ‘fronting’ and is actually illegal and a form of insurance fraud.
  6. Bundle your policies – If you have multiple insurance policies for non-car insurance products such as home or pet insurance, you can ask your provider to bundle your policies into one. Some providers offer discounts for having multiple policies with them, so it’s worth checking.
  7. Don’t modify your car – Modifying your car can potentially void your existing coverage if your insurer doesn’t cover it. It can also make future insurance much more expensive even if your modifications are covered by insurers. Check with your insurer before making any modifications and weigh up if the potential premium changes are worth it.
  8. Avoid unnecessary extras – Some insurers will offer you extra coverage options such as lost key coverage, windscreen cover, legal and breakdown cover, and so on. Whilst these can be useful for some motorists, they won’t benefit everyone. Before adding extras to your policy, you should consider which add-ons you may not actually need, this can help keep your overall premiums down.
  9. Mention your job – If you have switched to a remote or hybrid role, it pays to let your insurer know. Since remote and hybrid roles involve a reduced amount of driving, updating this information with your insurers can help shave off costs from your premiums.
  10. Consider multi-car insurance – If you are part of a household with multiple vehicles, it can be cheaper to insure them all under one policy rather than individually.

Getting cheaper car insurance

Getting cheaper car insurance doesn’t need to be difficult when you know where to look. Quotezone can help you quickly compare multiple insurance policies in moments – get cheaper car insurance today and start saving on your premiums.

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This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes


References:

*https://www.ey.com/en_uk/news/2023/06/ey-uk-motor-insurance-results-analysis

**https://www.abi.org.uk/news/news-articles/2023/11/increased-cost-of-materials-and-labour-continue-to-push-up-price-of-motor-insurance-in-the-last-quarter/

***https://www.abi.org.uk/news/news-articles/2023/9/record-motor-insurance-payouts-to-keep-drivers-mobile/

****https://oxbowpartners.com/blog/motor-market-report/

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