UK Edition
Drivers are seeing their car insurance premiums soar by as much as 50pc as new figures reveal how rising theft and repair costs are hitting insurers.
In January 2022 the Financial Conduct Authority prohibited insurers from charging existing customers more than new ones for the same policy, known as loyalty premiums. Yet despite this costs for car insurance are continuing to rise.
Last week, Direct Line agreed to pay £30m to customers who were overcharged when they renewed their home or car insurance, following intervention from the City watchdog.
The insurer admitted to an “error” in implementing the FCA’s new pricing rules which came into effect from the start of 2022.
Now motorists are taking to social media to vent their frustration with their renewal quotes that have increased by hundreds of pounds.
Michelle Carlisle, 43, who lives in Hertfordshire was quoted £1,029.70 by Direct Line to renew the insurance on her Mercedes-Benz B-Class family car. Last year the quote was just £654.07.
“I understand that a lot of companies are increasing renewals with inflation but this particular hike is over 50pc more,” Ms Carlisle told The Telegraph.
“That to me, with no actual changes to your details, is completely unjustified. I’m 43, it’s not like I’m a young woman driving around in a ridiculously fast car.”
Since flagging the renewal quote on social media, Carlisle has been approached by the insurer with a revised quote of £897.
The loyalty penalty has been banned but drivers still face sharp increases at renewal due to a rise in vehicle repairs and thefts.
Figures from The Association of British Insurers (ABI) show the cost of vehicle repairs leapt by 46pc to reach £2.5bn between April and June this year – the highest figure since the ABI started collecting this data in 2013.
In the second quarter this year, the cost of providing replacement cars while owners’ vehicles are being repaired jumped by 52pc to £157m.
Furthermore, payouts for vehicle theft rose to £196m, a 53pc increase compared to the same period last year.
Sania, 27, lives in Bradford and drives a Kia. Her insurance premium last year with Churchill was £1,043.68, but for the coming 12 months she has been quoted £1,733.99, a 66pc increase.
She says while her insurance has always been higher as a result of the area she lives in, the company hasn’t provided her with a reason for the new increase.
“I expected it to go up by a couple of hundred as that’s what happened in the past. Obviously I will be looking elsewhere for my car insurance. It’s just really frustrating that I will have to take the time out to do that,” she said.
Data from comparison site Compare the Market shows that vehicle premiums last month rose 46pc compared to August 2022, from £543 to £794.
Laura Hughes, ABI’s manager, general insurance, said: “With many families facing higher cost-of-living bills, anyone concerned about being able to afford their insurance should speak to their motor insurer to see what options might be available.
“And despite cost pressures, it can still pay to shop around to get the policy that best meets your needs at the most competitive price.”
Julie Daniels, motor insurance expert at Compare the Market, said: “Compare the Market’s latest data has revealed that car insurance premiums have increased by up to £251 year-on-year, reaching £794 in August 2023.”
The comparison website’s own findings suggest motorists could save £457 by switching to a new provider at renewal.
Consumer rights expert Martyn James says there are some other tricks you can try in order to bring down your insurance premium.
“Dig out your old insurance document and find your renewal date. Make a diary note for four-weeks beforehand and then call the insurance company and say ‘if I renew now what you can do for me?’.”
“Always shop around between comparison websites and, where possible, phone up insurers directly.
“If you get a better quote, phone the insurer – you may get a cheaper rate again by going direct.”