Average price paid for motor insurance has fallen by nearly £40 this year so far

The average price paid for comprehensive motor insurance has fallen by nearly £40 this year so far, according to an industry body.

Motorists paid £429 on average for a policy in the third quarter of this year, the Association of British Insurers (ABI) said.

Drivers are continuing to benefit from fewer motor claims made during Covid-19 lockdowns, it added, helping to keep policy prices at their lowest level in more than five years.

The typical price paid by motorists for cover has fallen by £39.47 this year so far.

A shake-up by the Financial Conduct Authority (FCA) means that from January 1 2022 insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer.

It is likely that firms will no longer offer unsustainably low-priced deals to some customers, the FCA said previously.

But the regulator estimates that its measures will save consumers £4.2 billion in total over 10 years, by removing the loyalty penalty people pay for sticking with their existing home or motor insurance provider and making the market work better.

Laura Hughes, the ABI’s manager, general insurance, said: “Motorists continue to see the benefits of fewer claims made during the pandemic lockdowns.

“While next year will see some significant changes in how motor insurance is priced with the introduction of pricing reforms, and continued cost pressures around repair costs, the market will remain competitive, so it will still pay for motorists to shop around for the best deal for their needs.”