Car Insurance Premiums Fall by 8.9%
According to UK insurers, comprehensive car insurance premiums fell by a total of £36 (which equates to 8.9%), on average, in 2013. During the final 3 months of the year, the average annual insurance policy cost was £370, compared to a cost of £406 in the previous year, according to the Association of British Insurers (ABI). The insurer’s predictions in regards to the decline of whiplash claims has helped lower annual premiums thanks to increased awareness of fraudulent claims along with stricter measures to combat them.
However, in the final quarter of the year, the average cost rose by £5 (or 1.4%) in comparison to the previous 3 months. These insurance premium figures are based on data which comes from the amount that consumers are actually paying when taking our or renewing a policy, not the quoted price. The statistics only cover comprehensive insurance policies, which happen to be the most popular type among motorists. Research has shown that 8/10 consumers spend time comparing prices before they go out and buy an insurance policy.
As previously mentioned, measures have been put in place in order to combat and reduce the amount of fraudulent car insurance claims. Various changes to the civil legal system have helped push down premium prices, but there is still room for improvement and there is further scope for pushing down prices even more. The competition commission has been analysing the private motor insurance industry, which is worth an estimated £11 billion. In December, the commission said: “The cost is ‘unnecessarily high’ for all drivers owing to the complex chain of claims.”
An increase in insurance premiums usually comes from the costs associated with courtesy cars and repairs, which is covered by the insurer of the at-fault party. Research has also shown that a lot of post-accident repairs are often low quality and the competition commission is looking at ways to stabilise and fix the market, with a final report being due by September 2014. Possible fixes include placing caps on the cost of replacement vehicles, making the not-at-fault driver’s insurer provide the replacement vehicle or having the at-fault driver’s insurer manage the claim altogether.
James Savery, 29 January 2014