Motor insurance prices continued their recent downwards trend during the first quarter of 2014, according to one of the key surveys being watched to judge the impact of the civil justice reforms.
According to the Confused.com Motor Insurance Price Index in association with Towers Watson, the 7.5% reduction over the first three months of 2013 means that comprehensive prices have fallen by around 19% in the last year, from £736 to £596. The last time that the average premium stood below £600 was at the end of 2009.
Comprehensive policyholders in Manchester and Merseyside received the largest annual average price cuts in the country, amounting to 23% or a price saving of nearly £250. “These areas have previously been associated with particularly high third-party claims costs and so would be expected to see greater benefit from LASPO and related reforms,” the survey said.
Stephen Jones, UK head of P&C pricing at Towers Watson, said: “This quarter’s price reductions are sizeable, even allowing for the fact that motor insurers may wish to be tactically competitive around this time of year due to growing new vehicle registrations and the pattern of market renewal dates.
“Further contributing factors could include optimism surrounding potential reforms in the medical assessment of whiplash and action which may be taken on third-party repair and hire costs.
“Another factor to consider is that some insurers declared increased reserve releases when announcing their year-end results, perhaps indicating growing confidence in their understanding of the claims cost impact of recent legislative changes including LASPO.”
The survey showed that telematics policies – involving a device fitted to cars that tells insurers how well the policyholder is driving – are an increasingly significant feature of the cheapest prices.