Young car owners are paying an extra £300 to drive a car this year as a result of insurers hiking up premium prices, new research shows.
Analysis from Compare the Market shows that young motorists between 17-24 are now paying £2,559 to drive a car for a year, compared with £2,263 in 2022 a “substantial” 13 percent increase.
Compare the Market said that “as a result of the increase in premiums, car insurance now represents 57 percent of the total car running costs for young drivers.”
It follows increasing concerns in the sector that driving is becoming “unaffordable” for car-owners, with 60 percent currently thinking the cost is too high for most people to afford.
Insurance firms have been hiking premium prices, as the cost-of-living and rising inflation causes an uptick in the cost of repairs, labour shortages and a range of other expenses.
Julie Daniels, motor insurance expert at Compare the Market, said: “Young drivers will be concerned that the cost of their car insurance is accelerating. The cost-of-living crisis and higher insurance premiums mean that many young drivers could face a struggle to stay on the road.”
She added: “For young drivers looking to save money, it is a good idea to shop around for car insurance and compare policies to see if there is a better deal available.”
Last week, MPs faced a grilling from the Treasury Select Committee, with MPs questioning insurance bosses on whether they are “profiteering” off rising costs.
Yesterday, a new report from consultancy Oxbow Partners forecast that the cost of premiums would rise 14 per cent next year and not flatten out until 2025.
Confused.com and Willis Towers Watson’s recent index revealed that quoted motor insurance costs were increasing at the quickest rate in over a decade.
The Association of British Insurers refuted allegations that insurance groups were profiteering when contacted by City A.M.
According to ABI data, the current average premium rose by 16 percent in the first quarter of 2022 and currently sits at its highest level since 2019.
The association said that insurers were “doing all they can to keep motor insurance as competitively priced as possible.”
By CityAM
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.