Continuing downward pressure on car insurance prices for younger drivers pushed the overall average cost of a comprehensive policy in the UK down by a further £17 to £579 during the second quarter of 2014, according to the latest Confused.com Car Insurance Price Index, in association with Towers Watson.
Prices for new comprehensive policies fell by an average of 2.8% between March and June 2014, despite the appearance of some modest quarter-on-quarter increases for some age groups and for those living in certain parts of the country. Over the last 12 months, UK drivers have typically seen average savings of nearly 15%, or just short of £100 per policy.
Quarterly reductions for third party, fire and theft policy holders were much smaller at 0.3% but, taken over the last 12 months, prices have still fallen on average by nearly 14% - or just over £150.
The biggest winners by far, in both the most recent quarter and over the last year, have been younger drivers. Average annual comprehensive policy price cuts for all 17-year-olds have amounted to nearly £1,000 (-32.2%) and have averaged over 20% for all those aged under 21. In this younger age group, price reductions in the second quarter varied from 4.3% for 20-year-olds to over 10% for 18-year-olds.
Stephen Jones, UK Head of P&C Pricing at Towers Watson, commented: “This is a record 10th consecutive quarter in which prices have fallen overall even though some parts of the motoring population may not have shared in the latest reductions. What it shows in particular is that the UK motor market is still competing and innovating hard in the younger driver segment.”
He added: “The publication of reports by both the Competition and Markets Authority on insurance repair costs and by the Transport Select Committee on whiplash and small claims have come too late to have much, if any, effect on this latest quarter, but it will be interesting to see if the proposals they contained influence insurers’ actions over the next quarter.”
While it’s good news for nearly all motorists in terms of cost saving, motorists in some geographical pockets are experiencing rising car insurance premiums – particularly those who live in the City of London. Motorists in this area experienced a yearly price increase of 2% - and a quarterly price increase of 11% - bringing the average premium to £1,044 - £465 more than the national average. Other geographical pockets where average prices rose in the quarter included Carlisle (2.5%), Edinburgh (1.4%), Lancaster (1.3%), and Kingston-upon-Thames (1.0%).
However, these increases were balanced out by neighbouring postcode areas, resulting in all regions across the UK seeing average comprehensive price decreases of at least 1.2% in the quarter. Taken over the past year, the smallest regional reduction has been 12.3% in the East Midlands. Drivers in Manchester and Merseyside have enjoyed the biggest annual decreases, averaging £184.
Gemma Stanbury, Head of Car Insurance at Confused.com says: “Once again, it is positive news for motorists as car insurance prices continue to fall, with comprehensive premiums now averaging at just £579. In fact, average prices are now nearly a third cheaper (32%) than this time three years ago during the price peak (£579 v £858).
“However, it’s younger drivers who are the real winners, with 17 year olds seeing their comprehensive car insurance premiums fall by nearly half since their peak just under three years ago, dropping a staggering 46% from £3,729 to £1,997.
“While it is great news for consumers that premiums are continuing to fall, these ongoing drops in car insurance prices are unlikely to be sustained. We’ve seen premiums reduce continuously over the last couple of years, so motorists should not necessarily expect prices to continue dropping at this rate.”
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