According to the Index, which is based on price data compiled from almost six million customer quotes per quarter, the first three months of 2018 saw prices fall by 7% (£59), which is the largest quarterly reduction in premiums seen in four years.
According to Willis Towers Watson, the reduced prices this quarter continue to reflect the perceived uplift in market prospects shared by motor insurers in response to proposed government action to tackle the extent of exaggerated low value personal injury claims and reform to the personal injury discount rate.
Stephen Jones, UK Head of P&C Pricing, Claims, Product and Underwriting at Willis Towers Watson, commented: “A third quarterly drop and annual deceleration in premiums indicates the industry clearly expects the new Civil Liability Bill to lead to a positive discount rate and, as one would expect in such a highly competitive market, these cost benefits are being passed through to consumers.”
The cost of comprehensive car insurance fell across the UK with all regions experiencing a quarterly decrease, with drivers in North West England best off with their insurance premiums decreasing on average by 9% to £769, followed by an 8% drop in prices in the North Midlands (£731) and East/North East Scotland (£580).
More locally focused data shows drivers in the City of London benefited from the greatest quarterly fall of 21% (£1259). This price drop means East London is now the most expensive location in the country for car insurance, with motorists now paying on average £1360. The cheapest place for motor insurance in the UK is Dorchester where drivers were paying an average of £533 in the last three months.
Similarly, this significant deceleration was reflected across all age groups, with drivers aged 27 benefiting from the largest quarterly cut in premiums at 11% (£933). At the other end of the spectrum, 68-year-old motorists experienced the smallest quarterly price drop at 3% and the highest overall annual rise of 8%, taking their annual premium to £543, which still remains however significantly less than the national average.
Stephen Jones noted: “There are a number of hurdles that will need to be cleared before a new discount rate comes into effect, expected in April 2019, as well as the possibility of further increases in Insurance Premium Tax, continued uncertainty caused by the Brexit negotiations and ongoing pressures on repair costs. However, the outlook for consumers is far more positive following these latest favourable developments in the Ogden rate saga.”
Steve Fletcher, head of data insight at Confused.com, said: “Uncertainty around the Ogden rate has meant the market has faced a year of volatile and inflated car insurance pricing, and at one point it looked like it was going to continue rising. But the announced rate review means insurers feel confident in calming their premiums, and our quotes data shows prices are down annually for the first time in three years.
“In all likelihood we’re embarking on a downward trajectory, at least in the short term. If historic trends are anything to go by, we expect when prices do start to go up again it will be from a higher base.”
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