Car insurance prices have continued to keep pace with inflation1 over the last twelve months. The cost of comprehensive cover rose by 4.9% in 2011, with third party, fire and theft (TPFT) premiums increasing in cost by 10.2% year-on-year.
The Confused.com/Towers Watson Car Insurance Price Index is based on more than 4 million quotes. The latest analysis, which looks at car insurance price changes throughout 2011, reveals:
* The average cost of a comprehensive policy at the end of 2011 stands at £844, a rise of £39 over the past 12 months
* Prices vary considerably according to age, with 17-20 year olds paying an average of £2,590 at year end, while those aged 66 and over typically pay £451
* Drivers in the Manchester/Merseyside region saw the largest upward swing in comprehensive cover premiums in 2011
* At postcode level, drivers in Bradford, Oldham and Manchester have seen the biggest percentage increases for comprehensive cover, although encouragingly some prices have come down, notably in Falkirk in Scotland
The last quarter of 2011 showed a gentle increase compared with the hikes experienced in previous quarters: there was less than 0.05% change in the average comprehensive premium for the last quarter of 2011. The average cost of a policy rose marginally from £843 to £844 in quarter four.
Prices for TPFT rose by 0.6% in the final quarter, meaning that TPFT customers, who typically have a younger age profile, are paying £1,162.
Despite the continuing rise in comprehensive cover prices in 2011, the level of annual increase has eased considerably after the inflation-busting increases of 37.8% in 2010 and 13.3% in 2009. The annual price rise of 10.2% for third party, fire and theft (TPFT) customers compared to over 57% in 2010.
Towers Watson director, Peter Lee, commented: "After two years of exceptional increases, 2011 was more typical, commensurate with insurers applying price rises more selectively. But with claims inflation remaining an issue, and uncertainty around the impact of changes in legal process and regulation, motor insurers will continue to have some hard decisions to make during 2012 about balancing profitability and volumes. "
Gareth Kloet, Head of Motor at Confused.com, said: "Consumers are not completely out of the woods yet as prices are still increasing year on year - just not at the substantial levels of before. Such increases add to already strained household budgets. The incentives to compare providers remain, particularly as more selective pricing action means different insurers will target different customer segments."
Some regions, particularly in Scotland, but also in Northern Ireland and the West of England went from increases in comprehensive premiums of approximately 30% in 2010 to price decreases. Over the past 12 months, prices have risen fastest in Manchester/Merseyside, reaching 12.7%.
After a respite of one quarter, Bradford regained the dubious distinction from Oldham of the postcode with the fastest rising prices over a 12 month period (see table below).
Postcodes with fastest rising prices in 2011
Bradford 17.1%
Oldham 14.8%
Manchester 14.4%
Ilford 13.1%
Blackburn 12.9%
Halifax 12.7%
Liverpool 12.6%
Birmingham 12.3%
London - East 11.9%
Bolton 11.7%
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