Car insurance prices available through price comparison sites, and particularly those for younger drivers, dropped more steeply in the third quarter of 2012 than previously estimated.
The downward price movements were the biggest seen in any quarter since the launch of the Confused.com/Towers Watson Car Insurance Price Index in 2007. Comprehensive cover premiums across the UK fell by an average of 5.1% between July and September, meaning that rates have dipped by a typical 10.3% in the last 12 months.
The average comprehensive premium in the UK stood at £757 as of the end of September, a drop of £87 in the last year.
Annual price movements for third party, fire and theft cover also became negative for the first time since 2007, falling by an average 2.1%, or £24 over the last 12 months.
Duncan Anderson, Towers Watson's Global Pricing and Product Management leader, commented: “Despite this being the fifth successive quarter of flat or falling rates for comprehensive cover, I think the current scale of the annual and quarterly decreases will, and probably should, cause some pause for thought in the insurance industry.”
The largest portion of the price decreases was accounted for by reductions for young drivers, particularly aimed at women. Comprehensive rates for all 17-20 year olds have fallen by 13.6% in the past year, with females in this age group having seen average decreases of 17.3%, significantly aided by a 9.1% drop in the third quarter.
The targeting of young women for the largest comprehensive cover price decreases was also reflected in female insured only driver restriction prices and in significant price cuts over the quarter for drivers of smaller cars.
Duncan Anderson added: “Price decreases of this order signify jostling for position amongst insurers ahead of the implementation of the European Court of Justice ban on the use of gender in pricing from 21 December. Having won more younger driver business, they will seek to retain profitable segments by substituting other factors for gender and minimising the impact of the future price rises that are reasonably anticipated to affect many women in 2013.”
Age and gender price movements: July to September 2012 (comprehensive cover only)
Gareth Kloet, Head of Motor at Confused.com, said: “We would recommend that young drivers in particular take advantage of these latest price drops if they are able to renew now, but we anticipate that steep price hikes loom with the advent of the EU gender ruling, which means shopping around has never been so key.”
|
