General Insurance Article - Car insurance price rises are in reverse


Comprehensive car insurance premiums have fallen for the first time since H1 2018, with UK motorists now paying £762 on average, some £5 less than they were paying this time last year, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson. This also represents the smallest annual shift in prices since 2015.

 Prices fell by 1% (£12) in the last three months, according to the longest established and most comprehensive car insurance price index in the UK, which is based on price data compiled from almost six million customer quotes per quarter. This decrease brings an end to the price rises recorded across consecutive quarters from Q3 2018 to Q4 2018, which saw premiums rise to £774 at the end of last year.

 Stephen Jones, UK P&C Leader at Willis Towers Watson, commented: “The fluctuation in premium levels seen across recent quarters reflects ongoing uncertainty surrounding the impact of the Civil Liability Bill 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 cost of comprehensive car insurance fell across the entire UK, with most regions experiencing a quarterly decrease, and with drivers in the Scottish Borders and the North West of England best off with their insurance premiums decreasing on average by 5% to £579 and £756 respectively. The South East of England was the only region not to benefit from a drop in prices, although with premiums increasing by the smallest of margins (0.09% or £1) to £664.

 More locally focused data shows that drivers in the City of London experienced the greatest quarterly fall of 7% (£1333)1, despite which it remains the most expensive location in the country for car insurance. The cheapest place for motor insurance in the UK is now Exeter where drivers were paying an average of £534 in the last three months.

 Male drivers aged between 17 and 20 were affected by the greatest quarterly rise of 5% and continue to pay the most of any demographic ? £2,343 on average. Male drivers to benefit from the greatest price fall were those aged between 66 and 70, seeing a 5% price decrease taking their annual premiums to £481. Meanwhile female drivers across all ages experienced a drop in prices, except for those aged between 17 and 20, with their premiums increasing slightly by 1% to £1660.

 Stephen Jones noted: “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 Bill 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.”

 Steve Fletcher, Head of Data Insight at Confused.com comments, “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.”

 Footnote
 1. While the Hebrides and Shetland Isles recorded larger price decreases in Q1 2019, their small sample sizes mean the results are not considered statistically significant.

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