This latest increase means that the average comprehensive premium has now reached £715, a 6.5% rise (or £44) during the second quarter of 2016. Third party, fire and theft (TPFT) prices have risen even more sharply by £103 in the last quarter, or 9.1%, to £1231. This is the highest cost for TPFT insurance recorded by the Index since its launch in 2006.
Prices experienced a brief plateau during the first quarter of 2016, however the underlying price trend for the last two years has remained steadily upwards. The last five months have seen a steady increase in comprehensive cover prices, with figures from the Price Index+ service showing monthly price increases recorded in 13 of the last 16 months.
Stephen Jones, UK Head of P&C Pricing at Willis Towers Watson, commented: “Older drivers have seen the biggest increases in car insurance premiums, which are most likely to have been driven by inflationary pressures on claims costs, especially on vehicle damage repair costs.
“While there are, unfortunately, relatively more collisions involving older motorists, what is contributing to premium increases are the cost and complexity of repairs, particularly as cars are fitted with more expensive technology. An increase in the number of accidents in the second half of 2015, together with increases in repair costs in multi-vehicle accidents flowing from a legal ruling in 2014, are also likely contributory factors.”
The effect of this quarter’s rate changes on individual comprehensive policyholders varied considerably. Notably, male drivers aged 36 and over experienced the highest quarterly price increases, ranging from 7.4% to 9.3%, while female drivers aged between 31 and 35 benefited from the lowest rises at just 4.1% to £535 for comprehensive car insurance. Every age group has been affected by double-digit annual increases, with male drivers aged over 71 hit hardest with a 23.5% annual rise to £466.
On a regional basis, the Scottish Highlands saw the biggest quarterly increase of 8.4%, while a rise of just 2% meant drivers in Central and North Wales received the lowest price jump. Variations in pricing treatment were more marked at postcode level, with Hereford the only town in mainland UK to enjoy an actual drop in average prices at 1.6%, while prices went up in Dorchester by 16.2%.
Steve Fletcher, Head of Data Services at Confused.com said: “We’ve not seen price rises of this magnitude for five years – a 19% annual increase is substantial to say the least. And these price rises are being felt across the board, for drivers of all ages and genders, across all UK regions.
“If prices continue to rise at the rate we’ve been seeing, we could be facing the possibility of average comprehensive premiums breaching the all-time high seen in 2011, when they peaked at £858. This, combined with rising fuel prices and increased motoring costs across the board, could result in a sizeable dent in drivers’ pockets.”
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