The cost of average comprehensive motor insurance cover in the UK has dipped below £600 for the first time in five years after a strong first quarter of sizeable price reductions, according to a price comparison website today.
Current premium levels, published by Confused.com's car insurance pricing index in association with Towers Watson, showed that the average comprehensive costs in the first quarter of 2014 fell by 7.5%. This marked a 19% drop of £140 to £596 over the past 12 months, while the average third party, fire and theft premium across the country decreased by, 18% to around £959.
Towers Watson said the scale of reduction in comprehensive premium prices suggests a more cautious approach from motor insurers to developments in the market, like the implementation of the 2012 Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), which included a ban on referral fees and restrictions on legal costs.
The 'LASPO' effect was apparent within regional prices. Manchester and Merseyside, two areas that have been particularly associated with high numbers of third-party claims, saw the largest annual price cuts in the country - 23% between them.
Stephen Jones, UK general insurance pricing leader at Towers Watson, said the Q1 price reductions were sizable, even allowing for industry competitive around this time of the year because of new vehicle registrations and the pattern of market renewable 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,' he said.
'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.'
Among the cheapest motor insurance producds were telematics policies.
Towers Watson said it had noticed a growing number of telematic providers on price comparison websites, targeting young drivers with the cheapest quotes.
Jones added that two out of every three drivers aged under 30 were being offered a competitively priced telematics product. The average premium for a 17- and 18-year olds saw decreases of 39% and 30%, respectively, in the last year saving on average £1,400.