While the latest consecutive quarterly price rises ended a series of significant price cuts across four consecutive quarters from Q3 2017 to Q2 2018, drivers are still paying 6% less than they were paying this time last year (£774 compared to £827), according to the most comprehensive car insurance price index in the UK, which is based on price data compiled from more than six million customer quotes per quarter.
Stephen Jones, UK Head of P&C Pricing, Claims, Product and Underwriting at Willis Towers Watson, commented: “Reforms to the Ogden rate and the Civil Liability Bill will benefit the sector in the medium-term, at the same time recent price rises reflect the intense pressure on margins being experienced by insurers due to repair cost and claims inflation, which are likely to be further impacted by Brexit developments.”
The cost of comprehensive car insurance over the last 12 months fell across all regions in the UK, with drivers in Inner London benefiting from the biggest annual decrease of 9% (£114) in their average premiums from £1283 to £1169.
The smallest annual reduction of 2% was seen in the Scottish Borders, reducing average annual premiums to £612, while the South West is now the cheapest region for car insurance, which on average costs just £558. More locally focused data shows motorists in West Central London experienced the greatest annual drop in prices at 15%, reducing their premiums to £1200. The City of London continues to be the most expensive postcode area for motor insurance in the UK, where drivers now pay an average of £1439, and the cheapest town remains Llandridod Wells in Wales, where drivers were paying an average of £521 at the end of 2018 for comprehensive car insurance.
The price of car insurance for drivers aged 17 dropped to its lowest since 2006, with the average cost of car insurance for motorists in this age group falling by £349 (16%) to £1855, although they are only second behind drivers aged 18 for paying the most of any demographic. Female motorists aged between 61 and 65 pay the least of any age group and less than half the national average, with a bill of just £363.
Stephen Jones noted: “The implementation of the Civil Liability Bill should help tackle the compensation culture in whiplash claims, whilst revisions to the discount rate provide an improved and fairer system. However, low interest rates and intense competition will continue to impact premiums in 2019, with insurers facing the additional risk of a significant rise in the cost of repairs and imported car parts due to exchange rate movements, new tariffs or other potential Brexit-related trade barriers.”
Steve Fletcher, Head of Data Insight at Confused.com, comments: “Over the past two years, drivers have been on a rollercoaster when it comes to car insurance prices, with inconsistent increases and decreases. And this makes it very difficult to tell just which way the industry is heading. It’s likely 2019 will be equally as volatile and unpredictable, with the insurance industry being affected by various external factors, and the results of investigations into consumer loyalty.”
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