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The Actuary The magazine of the Institute & Faculty of Actuaries

Cost of comprehensive car insurance drops 14%

Comprehensive motor insurance premiums dropped by 14% in the last 12 months to £652, according to price a comparison website.  


In the third quarter of 2013 alone, average comprehensive costs fell by 3.9% or £26 per policy.

Current premium levels, published by confused.com’s car insurance pricing index in association with Towers Watson, have not been this low since March 2010. The price of comprehensive cover fell by £105, while the average third party, fire and theft premium across the country decreased by, 6.5% to £1,057.

Comprehensive premium prices have fallen in eight of the last nine quarters, driven by the implementation of Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), reflecting the reduction of fixed legal fees for personal injury claims.

However, Stephen Jones, UK general insurance pricing leader at Towers Watson, said there was a more complex picture behind the latest price reductions.

‘Already we’ve seen a number of senior figures within the industry suggesting that some may have placed too big a bet on LASPO and the other reforms. But there are other factors at play here,’ he said.

‘For younger drivers, an increasing number of telematics offerings are driving down average premiums, whilst for mass-market risks, data enrichment is providing a basis for more confident, targeted price reductions.’

On the basis of these trends, Tower Watson expects to see the cheapest premium measures to keep on falling, but with increasing price dispersion.

Young drivers saw the biggest drop in average comprehensive premiums, 17- and 18-year olds saw decreases of 8%, as telematics quotes and LASPO drove down costs.

Indeed, the ‘LASPO effect’ was apparent within regional price movements. In Manchester and Merseyside, areas that have the highest concentration of claims management companies, premiums fell by nearly 7% in the third quarter of 2013, claimed Tower Watson.

At postcode level, prices fell the fastest over the past year for those who live in West Central London, Llandrindod Wells, and Huddersfield. But, drivers with a comprehensive policy in Inverness received a 2.6% increase in the third quarter, meaning that their prices fell the slowest in the last 12 months.

The prices used for the cost analysis are based on an average of the best five quotes received by Confused.com.