#Car #premiums increase by 16%

By 4th June 2018 June 21st, 2019 No Comments
Confused.com figures show that the discount rate cut played a key part in the rise of premium costs.
The cost of comprehensive car insurance has continued to spiral during the first quarter of 2017 with motorists facing an average premium of £781.
The figures, which came from the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson, said comprehensive car insurance prices rose 16%, or £110, more than they were this time last year.
According to the research, which is based on price data compiled from almost two million customer quotes, the benefits of a 1.8% month on month decrease in January was swiftly cancelled out by a 3.5% rise this March.  
The research noted that the government’s decision in February to cut the personal discount rate from 2.5% to minus 0.75 was a “key factor behind the sharp turnaround in the direction of rates”.
Ogden rate
“We have seen decreases every January in the last four years, even during the upward trend from mid-2014 onwards, which in the past seem to have been largely driven by price competition between insurers during the renewal season in order to meet volume targets,” said Stephen Jones, UK head of P&C pricing, claims and underwriting at Willis Towers Watson.
“If it were not for the January reductions, the immediate impact of the Ogden rate cut would have been far more painful for motorists in the first calendar quarter.”

Additionally, the cost of third party, fire and theft (TPFT) policies has risen sharply compared to the same period in previous years.The research highlighted that prices were going up by 7.9% in the last quarter, significantly increasing the average quoted premium by £103 to £1414 – an annual increase of 25.4%.

The findings also detailed that the cost of comprehensive car insurance rose across the UK with most regions experiencing a quarterly increase.

Drivers in Greater Manchester and Merseyside were worst off with their insurance premiums rising on average by 3.8% to £1034.More locally focused data showed drivers in Gloucester were hit by the highest quarterly increase in England, by 8% to £614, compared with Galashiels in the Scottish Borders which experienced the biggest drop in average prices of 8.7% to £525.

Jones noted: “The latest results from the Index also show premiums have increased for newer and higher value vehicles, especially brand new ones which are increasingly technology-laden and as a result can cost more to repair.”
Steve Fletcher, head of data services at Confused.com said: “Drivers across the UK are seeing car insurance prices accelerate and there seems to be no signs of slowing. With prices having risen 16% annually, the average driver is now paying a whopping £781 for their premiums – £110 more than they were paying this time last year.
“And as the industry adapts to additional pressures, such as the drastic Ogden rate cut and the hike in IPT to 12% from June this year, we could be on course to drive past the £858 peak we saw in 2011. As car insurance costs continue to climb, average premiums could even break the £1,000 barrier by next year.”

Tim Kelly

Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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