UK car insurance prices drop 16%, outlook for 2022 “extremely uncertain”



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Supply chain issues and FCA’s price ban will impact insurance prices next year

Comprehensive auto insurance premiums fell 16% in the third quarter compared to the same period in 2020, the steepest drop in seven years as fewer cars on the roads due to COVID-19 restrictions resulted in a decrease in the number of complaints, according to a survey.

The latest car insurance price index from Confused.com and Willis Towers Watson showed that the average car insurance now costs £ 514 per year, the lowest in six years.

But prices could start to rise again as workers return to the office and road traffic increases following the lifting of lockdown restrictions, although the price outlook for 2022 is “extremely uncertain” in part due to market disruptions. supply chain, according to the investigation report.

Prices have fallen for six of the past seven quarters, although the rate of decline slowed between July and September compared to the first half of this year, according to the survey.

“The downward trend in prices continued for four consecutive quarters, mainly due to lower exposures and claims resulting from the COVID pandemic,” said Stephen Jones, UK P&C Consulting Lead at Willis Towers Watson.

“However, the rate of price decline has slowed over the past three months, partly due to the increase in the number of commuters returning to driving since the easing of lockdown rules, stays of been in the UK and other changes in driving habits. “

The Financial Conduct Authority (FCA) announced last spring that a ban on the “price walk” – the process by which insurance companies increase home and auto insurance premiums for existing customers who automatically renew their policy – would take effect from January 2022.

“The FCA price walk ban from January 1, 2022 received considerable senior management attention in 2021 and consumed significant amounts of insurer pricing resources,” Jones said. “The impacts of these efforts on prices will become apparent in the months to come. With widespread supply chain issues affecting many industries, including auto repair, the price outlook for 2022 is extremely uncertain. “

Louise O’Shea, CEO of Confused.com, comments: “It is likely that prices will start to rise as people return to work and spend more time traveling on the road, which means the risk of accidents. is much higher. We are already starting to see this in parts of the UK. And that will mean that the overall price of insurance will increase, which means that the cost of renewing will also increase. “

Shares of () were down 1.5% to 2,962p, while () Group PLC was down 1.42% to 278.10p.

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