The Association of British Insurance said motor premiums hit a six-year low in 2021, although cost pressures may force them to rise in the coming months. According to the ABI’s latest Motor Insurance Premium Tracker, the average price paid for comprehensive motor insurance was £434. This was down 7% on 2020 and the lowest it has been since 2015.

Despite falling premiums, the ABI said that between 2015 and 2020 the average amount paid for damage to policyholders’ vehicles increased by 59% and the average paid to third parties for damage to their vehicles rose by 32%.

Laura Hughes, manager, general insurance, at the ABI, said:  “While we expect the motor insurance market to remain highly competitive in 2022, rising costs for parts, repairs and other supplies and services will continue to put pressure on premiums for motor insurance for both new and existing customers.

“Insurers appreciate that many households are facing a cost-of-living squeeze with rising household bills as costs rise in other areas of the economy, and they will be doing all they can to ensure competitively priced motor insurance, in the face of the variety of cost pressures faced.

“While the FCA pricing rule changes may well lead to fewer introductory discounts, it should still pay to shop around for the best deal for your needs.”

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