Car insurance prices continue upwards
Private motor insurance premiums rose strongly again in the third quarter but are showing signs of slowing, the latest edition of the Confused.com/EMB Car Insurance Price Index (CIPI) has found.
Whilst the average cost of comprehensive cover rose, there is hope for drivers as it seems the rises are finally starting to run out of steam. Prices have risen by 37.5% in the last 12 months, with premiums now standing at £650 on average.
17 - 20 year olds have seen prices rise by a massive £616 over the last 12 months and those hoping to save money by opting for third party, fire and theft (TPFT) face a further blow. Drivers buying TPFT have faced above average increases, 11.7% this quarter and 54.2% since October 2009.
Darren Black, head of motoring at Confused.com, commented: "Whilst it is undoubtedly more bad news for consumers, there is potentially light at the end of the tunnel with the hikes seemingly losing momentum.
Once again young drivers have borne the brunt of increasing premiums, suffering across the board with rises in their age group and in the type of insurance they choose.
Young male drivers continue to suffer higher premiums than their female counterparts and there has been recent call for gender bias to be removed. It is important to note, however, that women do not pay less for their premiums because of positive discrimination but based on statistical evidence suggesting that, on average, they have smaller, less expensive accidents.
Insurance providers worrying about parents potentially fronting for their children in the face of the massive price hikes have also pushed prices up for those who choose to add someone other than their spouse to their policy. 46-50 year old men and women with an insured plus one policy have received increases of 65.6% and 60.3% respectively over the last 12 months.
"When talking about premiums, it would be impossible to leave out the effect of fraud, whether large- scale operations or simply embellishing personal injury for compensation, it is not a victimless crime and it is unfortunately honest motorists that pay. The National Fraud authority1 suggest that dishonest insurance claims cost around £2 billion a year and Cash-for-crash hotspots have been named in Birmingham, Liverpool, Blackburn, Manchester and Leeds.
EMB partner, Peter Lee, said: "The price corrections that have been taking place over the past year or so have been essential to getting many private motor insurers back on an even keel after poor 2009 results. The scale of bodily injury claims inflation revealed in a recent study of 85% of the private motor market has emphasised the need for price rises."
He added: "However, the level of increases is starting to slow down, with each month in the quarter showing flatter price rises than the previous one."