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The Actuary The magazine of the Institute & Faculty of Actuaries

Car insurance rates up again

Comprehensive car insurance premiums kept rising in the first quarter of this year, to an average of £781, some £110 more than the position a year ago.

Car insurance ©Shutterstock 585069361
Car insurance premiums continue to rise ©Shutterstock

The latest Confused.com Car Insurance Price Index, produced with Willis Towers Watson (WLTW), reveals that a 1.8% month-on-month decrease in January was more than cancelled out by a 3.5% rise in March. 

WLTW said the government’s decision in February to cut the personal discount rate from plus 2.5% to -0.75%, from 20 March, was a key factor behind the sharp turn around in rates.

“We have seen decreases every January in the last four years, even during the upward trend from mid-2014 onwards, which, in the past, seem to have been largely driven by price competition between insurers during the renewal season in order to meet volume targets," Stephen Jones, UK head of property and casualty pricing, claims and underwriting WLTW, said.

“If it were not for the January reductions, the immediate impact of the Ogden rate cut would have been far more painful for motorists in the first calendar quarter.”

These findings are based on price data from almost two million customer quotes.

The cost of third party, fire and theft rose sharply by 7.9% in the last quarter, increasing the average quoted premium by £103 to £1,414 the equivalent of an annual increase of 25.4%.

Comprehensive car insurance rates rose across most regions with quarterly increases highest in Greater Manchester and Merseyside at 3.8% to £1,034.

These costs though did not deter car purchases, with annual growth in the car market of 8.4% in March 2017 making it the most successful month ever for new car registrations, at 562,337, according to the Society of Motor Manufacturers & Traders. 

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