Motor premiums are continuing to rise and have reached an average of £788 in the face of rising claims, new research has found.
Consumer Intelligence’s figures – which are used by the Government’s Office of National Statistics to calculate official inflation statistics – said that premiums were 13.5% higher than a year ago “as the industry continues to battle rising claims and insurance premium tax, which rose from 6.5% to 9.5% in November”.
It added: “We can see the industry passed on last year’s increase and anticipate prices will rise again when IPT increases to 10% for all policies bought after 1 October.”
At last week’s PI Futures conference in Liverpool, delegates were warned that though the personal injury reforms announced in last November’s Autumn Statement had been delayed by Brexit, they should assume that the changes were still coming.
Some insurers, such as Aviva, have pledged to pass on any savings made from the reforms to policy holders.
However, ratings company Fitch recently predicted that insurers “will be reluctant to pass savings on to consumers before seeing evidence of reduced claims costs, so we do not expect the reforms to significantly affect prices before 2018”.
In the meantime, premiums will continue to rise, it said, especially as the levels of reserve releases that have supported profitability in recent years “are unsustainable in the long term”.
The Consumer Intelligence figures showed huge differences across the country and between age groups. The cheapest place to insure a car was Scotland where average premiums were £562. Drivers in the north-west and London were paying near twice that. In the north-west, the average bill was £1,177 after a 17.3% rise, while in London it was £1,068 due a 16.7% jump.
Average premiums for under-25s were up to £1,831, although Consumer Intelligence said prices were rising slightly slower than average “thanks to the growth of telematics products to reward safer driving”.
Separate statistics released by accountancy firm EY in June said that “the brief era of profit-making for the motor insurance market has come to an end… The industry dropped back into the red in 2015 after two years of profitability following the 2013 reforms to the personal injury compensation system”.