Has car insurance gone up or down?

Sometimes it’s hard to know who to believe when it comes to statistics, and recent figures regarding the trend in the cost of car insurance premiums are no exception.

According to numbers recently released by Insurancewide.com, there has been a reduction of 9.5% in the average cost of car insurance in the last 3 months. This covers both fully comprehensive cover and third party, fire and theft. James Harrison, chief executive of Insurancewide.com, therefore believes that the figures reflect the pressure on insurers to remain competitive, in order to attract new custom as well as retain the old. He doubts, however, that the downward trend is sustainable.

In direct conflict, however, are figures provided by accountancy firm, Deloitte’s, motor insurance index, showing that premiums have increased over the last 12 months. Deloitte’s figures are based on a far smaller sample than Insurancewide.com’s, with only 1000 policies analysed.

However, the managing director of price comparison website, Confused.com, is unsurprised by Deloitte’s figures. They are in line with their own prediction that premiums would have to rise this year to take account of the growing ratios of claims to premiums. In many instances, companies are paying claims of £110 for each £100 received in premiums. This deficit has been sustained in the past by dipping into reserves from more profitable times, but there is obviously a limit to how long this can be done.

The AA adds further confusion to the picture, by claiming that in the last quarter, premiums rose by 1.35% for comprehensive policies and 3.5% for third party, fire and theft (different percentages to those of Deloitte). A spokesman explains that it is not only accident cover which is hitting the insurance industry, but also claims for personal injury and legal costs. Claims arising from the recent floods have also taken their toll to the tune of an estimated £100 million. The average premium for third party, fire and theft cover is at an all time high of £1042.41, reflecting the cost of insuring young drivers, who are more likely to opt for this category of cover than their older counterparts.

Whichever figures you choose to believe, it would seem that it certainly pays to shop around when buying car insurance. Just because a company was able to provide competitively priced cover last time around, is no guarantee that it will be your best bet this time. Direct insurers continue to provide the best value, according to Insurancewide.com’s research.

Comments

Leave your comments

Name:
Email:
Comments:
Please enter the validation code shown

Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.