Drivers in Wales are being urged to shop around as the price of buying a new car insurance policy has dropped by £33, on average – but insurers have been ramping up the cost of renewals, new research finds.
New data shows the average price of a new car insurance policy in Wales dropped by 5% – or £33 – in the past 12 months, meaning those who shopped around may have benefitted from a saving.
That’s according to the latest car insurance price index by Confused.com (Q3 2020), powered by Willis Towers Watson. Based on more than six million quotes per quarter, it’s the most comprehensive new business price index in the UK.
The average price of car insurance in the region now stands at £652, following a £11 (2%) drop in prices in the past three months.
While car insurance prices have dropped for drivers in most areas of the region, some will have seen some even greater savings this past quarter. In particular, motorists in Cardiff are now paying £36 (5%) less for their car insurance compared to 12 months ago, with the average price now at £681.
Meanwhile, drivers in Newport are paying the most for their car insurance. Prices in this area are now £682, despite a £33 (5%) drop in prices over the past 12 months, on average.
While it seems drivers who are shopping around for a new car insurance policy are seeing some significant price drops, further research by Confused.com found that loyal customers aren’t seeing these savings, but instead are being penalised for their loyalty.
In the survey of 2,000 UK motorists, more than three quarters (77%) of those who received their car insurance renewal in the past three months (July – September 2020) saw their price increase by £44, on average, according to new research from Confused.com.
Louise O’Shea, CEO at Confused.com, says the new measures being proposed does not mean drivers will never get a more expensive price for their car insurance. This is certainly not the case.
“The ruling, which is expected to come into force from July 2021, simply prohibits insurers from calculating a price based on whether the customer is a new customer or a renewal customer. But an insurer could still review the way prices are calculated at any time, which means prices for some customers could continue to increase year-on-year.”
The data comes as the Financial Conduct Authority (FCA) released its proposal to put a stop to renewal price hikes, otherwise known as the ‘loyalty penalty’. According to the investigation, initiated by Citizens Advice and the Competitions and Markets Authority (CMA), this has cost consumers £1.2bn when opting to automatically renew their insurance or service, as providers apply price increases after their initial term.
But now, the FCA has proposed measures which means insurers must offer renewing customers prices no more expensive than if they were a new customer, which is due to come into effect towards the end of 2021. Although, research shows nearly two thirds (64%) of UK drivers still think insurers will find another way to make money from customers once this comes into force.