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Car insurance customers have become the new victims of stubborn UK inflation after the latest figures showed premiums up 43% on last year.

On top of spiralling mortgage and supermarket costs, May's data from the Office for National Statistics (ONS) saw motor insurance far outstripping CPI inflation - at 43.1% compared to 8.7%.

Figures from the Association of British Insurers (ABI) put it lower at 16% in the first quarter of 2023. ABI only looks at what customers pay for insurance - not what they are quoted as most others do - but their figure is still far beyond CPI.

Comparison site Confused.com's tracker suggests car insurance inflation was 20% for the first quarter of 2023 - at an average price of £657 a year.

Here Sky News looks at what's happening to motor insurance and why.

Why are car insurance increases higher than overall inflation?

Despite some prices, including fuel, starting to come down - the cost of different goods and services fluctuate at different rates.

Unfortunately for motorists approaching their renewal, many of the costs insurance companies face are still as high or going up - meaning they're forced to pass them on in the form of higher prices.

These includes wages, energy and raw materials needed for repairs.

Second-hand cars

Insurance claims often require courtesy cars, which means insurers are having to pay more to hire second-hand vehicles to give to customers while theirs are being repaired.

May's ONS data revealed that second-hand cars were among the "largest upward contributions to the monthly change in both CPIH (consumer price index with housing) and CPI (consumer price index) annual rates".

According to Auto Trader, the average price of a second-hand car has increased by 30% in the past three years.

This is partially still down to a continued shortage of new cars after production stopped in the pandemic, which has pushed up the prices of both new and used vehicles.

Spare parts

The costs of raw materials like metal and paint are "rising at rates well above general inflation", according to the ABI, which means insurers are having to pass them on in premiums.

Myron Jobson, senior personal finance analyst at interactive investor, says: "Insurers have pointed to the increasing cost of spare parts.

"Modern cars are equipped with advanced technology and safety features, which can make repairs expensive."

Semiconductors - needed to make smart features inside modern cars - are in particularly short supply worldwide.

Production is largely concentrated in Asia and the US, so western states are trying to scale up their own manufacturing capabilities to reduce pressure on global supply chains.

Mr Jobson adds that due to these supply chain shortages, parts are taking longer to arrive, leaving customers with hire cars for longer - "resulting in inflated costs which lead to inflated insurance premiums".

Energy costs

Like most businesses, one of the biggest costs for insurance companies is energy, which is still at record highs due to wholesale price hikes and the war in Ukraine.

According to Kevin Pratt, car insurance expert at Forbes Advisor: "Garages are themselves passing on their higher energy bills and labour costs, and insurers have their own bills and wage rolls to pay."

'Loyalty premium' ban

On 1 January 2022 the Financial Conduct Authority (FCA) banned car and home insurance providers from charging existing customers more to renew their policies.

This was a process known as "loyalty premium" or "price-walking", where insurers would lure new customers in with cheap quotes - but increase their renewal price year-on-year.

But there are still ways providers can offer higher renewal quotes - particularly when comparing with what's on offer through comparison websites.

And as Rob Moore, insurance expert at Wagestream, says: "This, combined with the fact customers are cutting back on expensive add-ons, has caused overall prices to rise, as the core product now needs to be more profitable to insurers."

What does this mean for customers?

Customers whose policies are up for renewal are complaining of unexplained price increases. This is despite no change in their circumstances and an additional year of no claims' discount.

Research carried out last month for Confused.com showed 55% of the 2,000 people surveyed received a higher renewal price.

Customers that Sky News spoke to had similar experiences.

Jan from Bolton paid £450.44 to insure her BMW 5 Series with Direct Line last year but has been presented with a 41% increase this time at £634.29.

"They claimed commercial sensitivities so conveniently they were unable to explain or justify," she said. "No changes to our circumstances, long-term customer with them and no claims. This must be called out. I'm so concerned about the effects of such unjustifiable price rises on inflation and interest rates."

Suzanne Murphy, 51, from near Solihull, is having to pay 31% more to insure her BMW X3 with LV this year.

She told Sky News she was unable to get a better price than £724.60 through comparison sites, competitors, or LV as a new customer.

"Some [quotes] were over £1,000, so I've been forced to stick where I am and suck it up," she said.

An ABI spokesperson said: "Insurers are aware of the challenges customers are currently facing and are doing all they can to keep motor insurance as competitively priced as possible.

"Like many other sectors, they continue to face higher costs and these are becoming increasingly challenging to absorb."

How can I reduce my quote?

Big companies like supermarket chains have come under pressure to reduce their profit margins in a bid to tackle inflation.

Asked if insurers could be tempted to do the same, Mr Jobson said it is "difficult to envisage insurers sacrificing profits to help cool inflation" - but if they did - they would benefit in the form of reduced costs.

In the meantime, there are ways insurers can get around the ban on premium loyalty - so speaking to your provider to negotiate by phone or online will likely result in a cheaper quote than "auto-renewing".

You can do this by using a comparison site.

Adding experienced named drivers with no previous claims can help bring your quote down - as can insuring more cars with the same provider.

Finding a secure place to store your car at night, or adding a security system or tracker, will also make claiming for theft and damage less likely, which can reduce what you're offered.

And paying annually - as opposed to monthly - will be cheaper as you will avoid paying interest.