The average price paid for motor insurance jumped by 8% in the last three months of 2022, according to the Association of British Insurers (ABI).
The typical premium paid for private motor insurance was £470, up by 8% on the previous quarter.
The average premium was also 7% higher compared with the final quarter of 2021.
Rising costs have added to upward pressures on insurance policies.
The ABI said delays in finding parts, the increased cost of paint and the jump in energy prices are among the factors adding to vehicle repair costs.
Like many other sectors, insurers continue to face higher costs, such as more expensive raw materials, which are becoming increasingly challenging to absorb— Jonathan Fong, ABI
Courtesy car costs have increased, as have second hand car prices, the trade body said.
The Financial Conduct Authority (FCA) introduced new rules on the pricing of motor and home insurance from January 2022.
The rules ensure that the price paid by renewing customers for motor and home insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as via an insurer, broker or price comparison website.
The price of cover continues to reflect a range of factors, including the cost of settling claims.
The ABI said the average price paid for a new policy during the fourth quarter of 2022 rose by 7% (£37) compared with the previous quarter to £531 – a record high.
The average price paid on renewal of an existing motor policy increased by 8% (£31) to £428.
Taking 2022 as a whole, the average price paid to renew an existing policy fell by 7% on the previous year to £392, while the average price paid for new cover rose by 11% to £500.
The changes during the year in part reflected the introduction of the pricing rule changes, the ABI said.
Jonathan Fong, senior policy adviser, general insurance, at the ABI, said: “Every motorist wants the best insurance deal, especially when coping with cost-of-living pressures, and insurers continue to do all they can to keep motor insurance as competitively priced as possible.
“Yet, like many other sectors, insurers continue to face higher costs, such as more expensive raw materials, which are becoming increasingly challenging to absorb.
“Anyone concerned about being able to continue paying their motor insurance premium should speak to their insurer about any alternative payment options that may be available.”
