Car Insurance Rises 9.4% - And There's More To Come

• Average bill increases by four times inflation to £661 with London and the North West paying more than £900
• Black box technology protects younger drivers but discount rate cut and tax rise piles on the pressure

Drivers are facing average insurance bill increases of 9.4% — more than four times the rate of inflation, new research¹ from insurance insight experts Consumer Intelligence shows.

Average prices hit £661 in the year to February and action by regulators to cut the discount rate governing payouts in major personal injury claims and another increase in Insurance Premium Tax mean they will continue to accelerate.

Motorists in London and the North West pay the highest average premiums of more than £900 and are seeing the biggest average increases as claim costs in the areas climb.

There is some good news for younger drivers — premiums for 21 to 24-year-olds are rising slightly more slowly at 7.8% a year thanks to increasing use of telematics — black box technology which rewards good driving behaviour.

However 21 to 24-year-olds pay the most at £1,176 a year compared with £372 a year for over-50s and £647 for those aged between 25 and 49, the data from Consumer Intelligence, which is used by the Government’s Office for National Statistics to calculate official inflation statistics, shows.

Prices for 21 to 24-year-olds have only increased by 3.9% since October 2013 compared with 35% for over-50s and 25.7% for 25 to 49-year-olds.

John Blevins, Consumer Intelligence pricing expert said: “There are already signs that the discount rate ruling is having an impact on premiums and the next IPT rise in June will add to the pressure.

“There were signs that price rises were levelling off but that is sadly no longer the case with all indications now that the only way is up. With inflation running at 2.3% it is clear that drivers, who have no choice over whether to buy insurance, are facing a squeeze on their budgets.

“Black box technology is helping younger drivers to some extent while the price rises for over-50s at around 10.8% a year reflect how insurers are adjusting risk to reflect the fact that our ageing population is driving for longer.”

The impact of telematics has grown rapidly — 53% of the most competitive quotes for younger drivers are on black box policies compared with just 33% three years ago.

The table below shows the average cost and price rise over the past year across the country. Drivers in Scotland pay the lowest prices but motorists in Wales are seeing the lowest average price rises.

Ends

Notes to Editors

¹The cheapest premiums were calculated by comparing the prices offered for 3,600 people by all the major Price Comparison Sites and key direct insurers. The top 5 prices for each person were compared to the previous month’s top 5, then these variations averaged to produce the index.

For further information, please contact:

Consumer Intelligence
Elinor Zuke
07863 350270

Citigate Dewe Rogerson
Kevan Reilly / Phil Anderson
020 7638 9571

About Consumer Intelligence

Consumer Intelligence (CI) is a market research agency specialising in the General Insurance and Banking Sectors. We have spent the last 12 years perfecting the art of collecting data so that organisations can benchmark themselves. Since 2003, we have been collecting and analysing millions of prices across the telephone, direct insurer websites and aggregator channels.