* The average price of a comprehensive car insurance policy rose by
2.7% in the second quarter of 2011, the fourth consecutive quarter in which
price rises have been less than in the previous quarter.
* The annual rate of price inflation for comprehensive cover is now
24.8%, down from a peak of nearly 38% at the end of 2010.
* At 1%, the quarterly increase for third party, fire and theft
(TPFT) policies was the lowest for three years, reducing the annual rate of
increase to 33%
* Consumers now pay an average of £858 for annual comprehensive
cover, an increase of £22 in the past three months and £170 over the last 12
months
* 26-35 year old male drivers received the highest comprehensive
cover increases in the quarter
* All regions of Scotland, in which referral fees are banned, saw an
overall price decrease in the quarter for comprehensive cover, compared to a
regional high 5% increase for drivers in Leeds/Sheffield
Car insurance prices stabilised further in the second quarter of 2011 the
latest Confused.com/Towers Watson Car Insurance Price Index has revealed.
The average price of a comprehensive policy rose by 2.7% between April and
June to £858, the smallest quarterly percentage increase for nearly two
years. As a result the annual rate of increase has slowed to 25% from a peak
of nearly 38% at the end of 2010.
TPFT cover rose by 1% in the quarter and 33% over the 12 months to the end
of June. The average TPFT premium now stands at £1,132, an increase of £11
in the quarter.
The continued deceleration in price increases comes despite recent Towers
Watson analysis that showed the private motor insurance industry as a whole
paid out £1.24 for every pound of premium received in 2010. Increasing the
financial pressures on companies, new research from the Institute and
Faculty of Actuaries has also shown that one in four third party motor
claims in the UK now involve an expensive bodily injury component.
Towers Watson director, Duncan Anderson, commented: "With the price
increases of 2010 starting to have an effect on 2011 performance, some
companies seem to be easing off increases in what is still an intensely
competitive market. Whether, given recent claims inflation, the market as a
whole has moved rates up enough to move into profitability is, however, far
from clear."
He added: "Effective claims management and fraud prevention remains key, as
does appropriately reflecting changing bodily injury experience in premium
rating structures. Enhanced use of geographical and vehicle data will also
become more important in light of the fact insurers won't be able to use
gender set prices from the end of next year."
Regional price differences highlight the timeliness of the intervention of
Jack Straw MP in the role that referral fees have had on escalating prices.
Drivers in Manchester/Merseyside, an area with one of the highest
concentrations of claims management companies (CMCs), have experienced the
largest price increases over the last 12 months of nearly 35%, with an
average increase of just under 5% between April and June. By contrast, the
four Scottish regions, where referral fees are banned by law and CMCs don't
exist, have the lowest rate of annual increase across the UK and actually
recorded price decreases of up to 2.3% in the last quarter.
Thanks to the third highest quarterly increase, Bradford remains the
postcode with the fastest rising comprehensive insurance prices over a 12
month period - just under 40%. Mr Straw's Blackburn constituency has the
sixth highest rate of annual premium inflation in the country at 35%.
Anderson added: "We think that it's good news for insurers and consumers
that Mr Straw's research has caused the Transport Select Committee to
re-open its enquiry into the cost of motor insurance."
Gareth Kloet, Head of Motor at Confused.com, said: "Consumers need
successful insurers and a wide range of options if they are going to see
improved value for money from their premiums."
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