Car insurance premiums fell by 4.9%, or £35, in the third quarter of 2017, according to the AA’s latest British Insurance Premium Index.
The Index Shoparound quote, which is an average of the five cheapest premiums quoted in a nationwide sample of buyers, fell from £714.85 to £679.93 over the quarter ending 30 September.
It is the first fall since Q1 2016. However, while prices have reduced from last quarter’s record high they are still 9.7% higher than this time last year.
Mike Lloyd, the AA’s director of insurance described the decline as “a small step in the right direction”.
According to Lloyd the change in fortunes can be attributed to a combination of factors, in particular the government’s decision to review the Ogden rate.
“Ministers quickly got the message that their drop in the discount rate was too much, too far and was hitting drivers in the pocket,” he commented.
“I’m glad that they announced in September that they would review it and the industry has responded favourably.”
Lloyd said he also believed that the industry was responding to the proposed Ministry of Justice reforms to whiplash claims.
“Although the reforms are not expected to be introduced for another year, the government claims they will have the potential to knock 30% off the typical car insurance premium paid,” he continued.
“The reduction we have revealed today underlines the industry’s willingness to pass cost savings straight on to their customers.”
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