Cost of car insurance falls at fastest rate in 20 years

[Adrian@TORQEN]

The cost of car insurance plummeted by an average of 12.4pc over the last year, marking the steepest annual price falls in over 20 years.

The latest AA British Insurance Premium Index, which details quarterly price changes in motor insurance premiums, showed the average cost of annual comprehensive cover fell from £648.61 at the end of September 2012 to £568.32 at the same time this year.

This is the biggest annual drop in premiums since the Index started in 1994.

Drivers aged 23-29 saw the biggest falls in their annual premiums, down 15.5pc to £704 over the last 12 months.

Young and old drivers saw the smallest premium reductions overall. Drivers aged 17-22 saw their annual premiums fall 4.6pc to £1,198.96 on average over the last year, while drivers aged 70 and over saw their premiums fall 4.8pc to £413.11.

Women have not benefitted from falling premiums as much as men thanks to last December’s European Court of Justice gender ruling. It insisted all insurance premiums must be gender neutral, which pushed up prices for females who were previously seen as safer drivers and offered lower premiums.

Regionally, drivers in Scotland saw the biggest premium falls over the past quarter - 5.5pc to £424.04. Scotland remains by far the cheapest place to insure a car in the UK. The smallest reduction was in East Anglia, where drivers saw a 1.4pc fall to £538.64.

Premiums for third party, fire and theft cover also fell, but remain far higher than the cost of comprehensive insurance. This reflects the type of motorists that typically buy this type of cover – usually young, inexperienced drivers.

The average cost of third party, fire and theft cover fell 6.4pc from £856.83 to £801.76 over the last 12 months.

Simon Douglas, director of AA Insurance, said the car insurance market has become intensely competitive.

He added that many insurers are reducing rates based on anticipated savings from efforts to crack down on claims management firms, plus increased efforts to tackle insurance fraud.

Justice Minister Chris Grayling today announced a crackdown on whiplash injury fraud. He said bogus compensation claims that have helped to force up average motor insurance premiums will be targeted by new independent medical panels which will assess whiplash claims.

Mr Douglas said: “The insurance industry is working hard with enforcement agencies to bring those attempting to make fraudulent injury claims to book. Indeed, there have been some recent widely-publicised arrests of criminal gangs deliberately causing crashes through ‘crash for cash’ and its new variation, ‘flash for cash’ scams in order to cash in on insurers by making false whiplash injury claims against innocent motorists.

“Honest motorists have been putting up with their premiums being affected by false or exaggerated injury claims for far too long. There has been a lot of talking and investigation into the car insurance market. Now premiums are reflecting anticipated law changes.â€

In a separate move, insurers will be able to obtain driver data direct from the DVLA from next year and most insurers are expected to start asking drivers for their driver number, listed on driving licenses.

This is expected to bring savings of around £15 for the cost of a typical car insurance policy as it will help to stamp out false declarations of driving experience and driving convictions.

In July, figures released by the Association of British Insurers (ABI) showed £1.1bn of fraudulent insurance claims were lodged in 2012, up £110 million on the year before. The level of fraud was nearly double that recorded in 2007 and was driven by a surge in false whiplash claims.

The (ABI) said fraudulent motor insurance claims totalled £610m, 55 per cent of the total, from 42,700 dishonest claims.

 

http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/10396910/Cost-of-car-insurance-falls-at-fastest-rate-in-20-years.html