Repair and supply issues are putting pressure on car insurance prices, ABI says
The average price paid for car insurance fell to its lowest level in six years in 2021, but cost pressures in the sector are starting to be felt, according to the Association of British Insurers (ABI).
The average price paid last year for full coverage was £434 – marking a 7% drop from 2020 and the lowest price since 2015.
But the ABI pointed to the rising cost of repairing damaged vehicles and supply chain issues that have led to delays in accessing some spare parts.
With road traffic returning to pre-coronavirus lockdown levels, the number of claims is also expected to rise.
The ABI’s tracker looks at the price consumers pay for their coverage, rather than the price offered to them.
A pricing overhaul has been introduced by the Financial Conduct Authority (FCA) from January 1 which means motorists no longer pay a loyalty penalty for remaining loyal to their supplier year after year.
But it could cause some customers who have already received deep discounts while shopping to pay higher prices than they would have before the price shake-up.
Laura Hughes, head of general insurance at ABI, said: “While we expect the auto insurance market to remain highly competitive in 2022, rising costs for parts, repairs and other supplies and services will continue to push auto insurance premiums for both new and existing customers.
“Insurers are aware that many households are facing a cost-of-living squeeze as household bills rise as costs rise in other areas of the economy, and they will do everything they can to secure car insurance at competitive prices, in the face of the variety of cost pressures they face.
“While changes to FCA pricing rules may result in fewer introductory discounts, it should still be beneficial to seek out the best deal for your needs.”