Over-50s have seen their car insurance costs rise faster than any other group, after the City watchdog reformed how much insurers can charge new customers.

Average motor premiums have risen by 6.2pc for the over-50s in the last three months, hitting £370 a year, according to Consumer Intelligence, an analyst. 

Younger drivers have faced smaller rises. Those aged 25 to 49 saw increases of 4.1pc, bringing average premiums to £610. Under-25s saw price falls in the last three months of 2.3pc, to £1,717.

These market changes have occured since the Financial Conduct Authority banned the so-called “loyalty penalty” in January. Before the ban, insurers would offer cheaper premiums to new customers before steadily increasing prices each time they renewed.

Since January 1 insurers have been forbidden from offering deals to new customers that are cheaper than those offered to existing customers renewing their policies.

The FCA said loyal customers would save up to £200 a year on their car and home insurance as a result.

However older drivers, who are less likely to switch, no longer have access to cheaper introductory offers. Other savvy consumers who shop around every year have also seen their costs jump.

Across all age groups, premiums are now 4.3pc higher since the start of 2022, with almost all of this rise accounted for in the month of January. The average premium is now £697, Consumer Intelligence said.