Insurance NewsMarket Prices

Motor premium upturn ‘on the horizon’ after modest Q4 price cuts: Confused and WTW

By 16th April 2019 No Comments

The price of car insurance fell 1.6% in the first quarter of 2019 after creeping upwards during the second half of 2018, according to the Confused car insurance price index, produced in association with Willis Towers Watson.

However, Steve Fletcher, head of data insight at Confused, said that premiums could soon rise again due to increasing claims costs.

Comprehensive car insurance premiums fell £12 in the last three months to £762 on average, having risen £8 in Q3 2018 and £14 in Q4 2019.

The findings of the price index square with those of Compare the Market, whose premium drivers index also showed premiums falling after an upturn in the last six months of 2018.

The reduction makes car insurance on average £6 cheaper than it was at the same time last year: the smallest annual shift in prices since 2015.

The quarter-to-quarter decrease is also much more modest than that seen between Q4 2017 and Q1 last year when prices fell £59.

Steve Fletcher, head of data insight at Confused, said: “The average price of comprehensive car insurance premiums has remained steady since late 2016, when you do not take in account the sudden reaction to the Ogden rate change. And this could be a reflection of the economic uncertainty the UK has faced over the past couple of years.

“Looking at the trend of car insurance, a drop in prices at the beginning of the year is commonplace: only once have we seen an increase in prices in Q1 since 2012. But with claims costs increasing, new technologies entering the car market we can expect an upturn in premiums is on the horizon.”

The South East was the only region where prices did not decrease, with drivers paying £1 more than they would have in the previous quarter.

Drivers in the Scottish Borders and North West enjoyed 5% cuts to their premiums, which now stand at £579 and £756 respectively.

Despite the overall reductions, young drivers still faced a quarterly increase in prices. Premiums for female drivers aged between 17 and 20 increased 1% to £1660, while those for male drivers in the same age cohort increased 5% to £2343: the most of any demographic.

Stephen Jones, UK property and casualty leader at Willis Towers Watson, said: “The fluctuation in premium levels seen across recent quarters reflects ongoing uncertainty surrounding the impact of the Civil Liability Act and the anticipated adjustment to the Ogden rate, following recent changes to the law around whiplash claims passed in December 2018 and due to come into force next year.”

“The first quarter of any year has often seen below-trend price movements as insurers have sought early volume momentum or a share of the key March new registration plate business ‘spike’.

“Further price fluctuations could yet materialise in 2019, as Civil Liability Act and Ogden effects overlay upon inflationary trends evident in the costs of crash repairs, owing to vehicles being more technologically advanced and reductions in the repair shop capacity able to handle the more advanced repair processes necessary.”

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Tim Kelly

Tim Kelly

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