Car insurance premiums have fluctuated for a fifth consecutive quarter in the UK amid continued market uncertainty, and are likely to remain volatile during the coronavirus crisis.
That is according to research from Confused.com and Willis Towers Watson (WTW), which found that car insurance prices fell by 1% in the first quarter of 2020.
However, this disguises a gradually increasing trend, with average premiums rising by 6% to £809 over the last year, reflecting inflationary and one-off cost pressures.
Graham Wright, UK lead of P&C personal lines pricing at WTW, said prices have fluctuated monthly this year with little evidence of an emerging overall trend, and that the impact of COVID-19 is still unclear.
“There is widespread recognition of claim frequency reductions whilst lockdown measures persist, and acknowledgement that these may be offset to some degree by severity increases, all of which adds to the uncertainty in the market.
“The current situation makes future prediction of claims inflation, the timing of the Civil Liabilities Bill implementation, and the impact on future reinsurance costs, all the more challenging.”
The analysis is based on price data compiled from almost six million customer quotes per quarter. How premiums have fluctuated over the last year is shown below:
The data shows that male drivers aged 71 or over benefited from the greatest price fall last quarter, seeing their annual premiums reduce by 4% to £525.
Meanwhile, male drivers aged between 26 and 30 experienced the largest price rise of 1%, increasing their annual premiums by £8 to £1093.
This comes after UK insurers were urged to offer refunds or reduced premiums to customers not using their car insurance during the COVID-19 lockdown, with young drivers among those paying most.
“While we don’t expect insurers to introduce discounts to account for fewer miles being driven, people are looking to make savings at this financially challenging time” said Steve Fletcher, head of data services at Confused.com.
“The winners will be the insurers that listen to customer needs and simultaneously react to market movements. Societal uncertainty means insurers will need to closely follow this situation as it unfolds.”
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