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08

Consumer insurance premiums 'down by nearly 5%'

Open-access content Monday 18th August 2014 — updated 5.13pm, Wednesday 29th April 2020

Insurance premiums for home and motor cover fell by 4.9% in the second quarter of the year compared to same period in 2013, according to the British Insurance Brokers’ Association.

The broker's Insurance Price Index, which is complied with consultants Acturis and examines nearly £5bn of premiums per year, found the prices had fallen across its 'shopping basket' for consumer insurance.

The biggest fall in percentage terms was a 5.6% drop in the cost of motor insurance during the quarter, while home insurance premiums fell by 4.2% compared to the same period last year.

BIBA's executive director Graeme Trudgill said: 'Overall this is great news for consumers and shows that the government and industry initiatives are working to reduce the cost of motor insurance.'

He told The Actuary that a combination of factors had helped put pressure reducing the cost of motor insurance premiums.

'The Ministry of Justice have just come out with the latest in fighting the cost of whiplash, and they implemented the Legal Aid, Sentencing and Punishment Offenders Act (2012) which outlawed referral fees in personal injury cases. Certainly insurers have dropped premiums with that in mind, and that should have a positive outcome,' he said.

'There's also been the Department for Transport's involvement in continuous insurance enforcement, and the uninsured driving rate has dropped.'

Meanwhile the latest quarterly index by the insurance arm of the AA highlighted that although the cost for an annual comprehensive car insurance policy fell in the three months to June, there were big regional differences.

The most expensive postcode was London, which commanded an average quoted premium of £922.44.

This was followed by the postal area IG, which included Ilford, Chigwell, Woodford Green, Buckhurst Hill, Loughton and Barking, with an average quoted premium of £912.07. The Greater Manchester postcode area 'M' was third at £820.63.

The cheapest was the Isle of Man at £231.49, followed by KW - the extreme north-east of Scotland - including Orkney, (£252.13). Postal area TR, the south-west of Cornwall was third cheapest at £279.72.

AA insurance managing director Janet Connor pointed out that car insurance premiums took into account not just the experience and age of the driver and the car model being driven, but a range of other factors including where the car is normally kept.

She said: 'Over the past year premiums have, on average, fallen in most areas of the UK and, encouragingly, some of the biggest falls have been in postcode areas that traditionally have paid the highest premiums.

'However, I don't expect the falling trend to continue. There are already signs that some insurers are looking to put their prices up.'

This article appeared in our August 2014 issue of The Actuary.
Click here to view this issue
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