The car insurer Admiral has turned a profit in the first half of this year despite covering 380,000 fewer vehicles, after it put its premiums up by 20%.
The price increase came on top of a 20% rise in the previous six months, meaning the cost of cover has gone up by about 44% over a year.
On Wednesday, the Office for National Statistics revealed that the quoted price for car insurance premiums across the industry had risen by 53.4% over the 12 months to July.
Admiral said its group pre-tax profit had increased 4% during the first half of the year to £233.9m. The fall in the number of vehicles covered in the first six months was bigger than over the whole of last year, when it fell by about 300,000.
The insurer said that while it recognised was “challenging times for many people”, it had had to increase prices in response to high inflation and rising costs.
Matt Britzman, an analyst at Hargreaves Lansdown, said: “The bad news for consumers is that car insurance is now another inflated cost to try and manage as part of the ever-increasing pressures on income.
“Some customers have had enough, and Admiral saw a 7% dip in customer numbers year on year. But for Admiral, that’s a loss worth taking as maintaining profitable insurance contracts is key, even if it means losing a few customers along the way.”
In June, a report found that 2022 was the UK motor insurance market’s worst performing year in a decade and that for every £1 insurers received in premiums, they paid out £1.10 in claims and costs.
Last month the Guardian reported that some customers had seen prices almost double, forcing them to start shopping around again. Fewer drivers switched during the pandemic, but appear to be searching for lower premiums again.
The Association of British Insurers (ABI) said last week that the average agreed premium across the industry in the three months to the end of June was £511 – 21% higher than the same period last year.
The ABI said sustained cost pressures were behind the record highs, with higher energy costs adding £71.75 to each repair. Paint and material costs have increased by nearly 16%, with the average price of secondhand cars rising 19%, it added.
The price comparison website Compare the Market said on Wednesday that its figures showed the average annual car insurance premium had surged to £743 – an increase of £208, or 39%, compared with this time last year. Its younger customer base will be paying higher premiums.
Anna McEntee, director at the website, said: “Drivers will be concerned that the cost of car insurance is rapidly increasing. Some young drivers are facing particularly steep hikes of more than £500. It’s now more important than ever for people to shop around and compare prices to check you’re getting a great deal.”