The cost of car insurance is rapidly increasing following the introduction of reforms designed to stop the exploitation of repeat customers.
At the start of 2022, new rules were put in place to stop insurers charging higher prices to loyal customers who automatically renewed their premiums each year, with discounts only offered to new customers.
The Financial Conduct Authority (FCA), which implemented the changes, said the move could save loyal customers about £120 per year.
However, fears that the reduced income from these customers could be passed on elsewhere appear to have come true.
Comparison site ComparetheMarket.com says car insurance premiums have gone up £64 year-on-year for the first two weeks of January, with the average cost being £700 per year.
The price of car insurance appears to be accelerating, too. Data shows that the average premium has gone up by £42 from £679 in the first week of January to £721 in the second week.
However, there are still deals to be found, because not every insurer has been passing on increases, with the cheapest premium still hovering around £573. At the start of January, the cheapest premiums have only increased about £31.
Ursula Gibbs, director at ComparetheMarket.com, said: “Our research shows the cost of car insurance is rapidly accelerating in January. The average premium has jumped £64 year-on-year.
“The cheapest deals available are also becoming more expensive so drivers will need to be quick if they want to secure a great price. The savings available to customers looking to switch could reduce significantly as more insurers hike their prices.
“If your policy is coming up for renewal, it is a good idea to shop around for a better deal as soon as possible. There is a brief window for savvy drivers to get this year’s car insurance at last year’s prices.”