Further written evidence from the AA
The biggest car insurance premium increases since
records began appear to have ended, according to the latest AA
British Insurance Premium Index.
The broker's benchmark Shoparound index, an average
of the cheapest three quotes from a range of insurers for each
"customer" in a UK-representative basket of risks, fell
by 0.3% (just £2) to £921 over the three months ending
30 September.
At the end of March 2011, premiums had risen by over
40% over the previous 12 months. The annual rise has now dropped
to 16% for the 12 months ending September, giving hope that the
worst of the price hikes are over.
Simon Douglas, director of AA Insurance, says: "The
past two years have seen the biggest-ever rises in premiums as
insurers struggled to close a widening gap between premium income
and claims costs. Although historically costs had been rising,
premiums had not and, at the end of 2009, for every £100
taken in premiums £123 was being paid out."
"Something had to give," he says. "But
the gap has now closed sufficiently to allow insurers to start
pricing more competitively once again."
However, he warns there are still inflationary pressures
for insurers and that the respite may be short lived.
"I believe that this fall is a respite rather
than the start of a trend. Premiums are likely to continue rising
next year, but at a much more modest rate," he adds.
"I would be concerned if they do start falling
because after a time, it could lead to a repeat of the past two
years' sharp premium inflation."
The steep upward premium increases recorded by the
AA's Index attracted the attention of the Commons Transport Committee,
which is continuing an inquiry into the cost of car insurance.
More recently, the Office of Fair Trading started a probe into
the industry while the Justice Minister announced reform of the
way that personal injury claims are managed: including an end
to so-called "referral fees". This is regarded as one
of the principal causes of premium increases.
Introduction this year of continuous insurance enforcement
(CIE) to tackle uninsured driving; the launch early next year
of a dedicated police insurance fraud unit funded by the insurance
industry and moves to allow insurance companies to access customer
data held by the DVLA are all also expected to help insurance
companies control fraudulent claims over coming months.
"I expect these moves to help the insurance
industry manage costs which, in turn, should help avoid big premium
increases in the future," Mr Douglas says. "But the
fact remains that while the number of accidents on Britain's roads
is falling, the number of personal injury claims continues to
rise and I'm glad that this is at last going to be brought under
control."
Over the past six months, premiums for young drivers
have also shown signs of falling. They fell by over 5% during
the previous quarter but have since risen again slightly.
Recent statistics from the Department for Transport
suggest that the number of crashes involving death and serious
injury amongst young drivers are falling although they remain
significantly higher than for other age groups.
Education, changes to the driving test and development
of new black-box "pay by performance" insurance solutions
should all help young people start their driving careers responsibly
and safely, Mr Douglas believes, but points out: "There will
need to be strong evidence that these reduce the number of serious
crashes experienced by young drivers before premiums fall much
further for them."
Car insurance premiums at a glance: Third quarter,
2011
— Average
Shoparound premium for a comprehensive
car insurance policy is now £921.38, a fall of 0.3% over
the past three months and a rise of 16.4% over 12 months. This
is an average of the cheapest three quotes for each "customer"
in the basket of risks.
— Market
average premiums (average
of all quotes for each "customer" in the basket
of risks) for a comprehensive car insurance policy £1,449.85,
a rise of 0.8% over the past three months; 16.0% over 12 months.
This is a rise of 277.1% since the Index started in 1994.
— Ups
and downs of an annual comprehensive car
insurance policy according to the AA's Shoparound average, since
2004:
— October
2011: £921.38.
— October
2010: £791.82.
— October
2009: £568.62.
— October
2008: £503.43.
— October
2007: £463.07.
— October
2006: £450.01.
— October
2005: £450.43.
— October
2004: £455.55.
— Regional
winners and losers:
SHOPAROUND
| Region | Oct-11
| Jul-11 | % Change
|
| North-west | £1,529
| £1,521 | + 0.6%
|
| London | £1,058
| £1,069 | - 1.0%
|
| Yorkshire | £1,065
| £1,058 | + 0.7%
|
| Central | £914
| £912 | + 0.3%
|
| Border & TyneTees |
£893 | £893
| - 0.0% |
| Wales | £790
| £793 | - 0.4%
|
| South | £789
| £795 | - 0.8%
|
| Anglia | £732
| £734 | - 0.3%
|
| West & West Country
| £723 | £725
| - 0.2% |
| Scotland | £555
| £556 | - 0.2%
|
| Northern Ireland | Insufficient data for analysis
|
— Shoparound
Index by age and gender:
MALE
| Age | Oct-11
| Jul-11 | % Change
|
| 17-22 | £2,977 | £2,872
| + 3.7% |
| 23-29 | £1,464 | £1,479
| - 1.0% |
| 30-39 | £788 | £788
| + 0.1% |
| 40-49 | £710 | £711
| - 0.2% |
| 50-59 | £559 | £560
| - 0.3% |
| 60-69 | £495 | £503
| - 1.6% |
| 70 + | £611 | £616
| - 0.8% |
| Subtotal | £1,132
| £1,132 | + 0.0%
|
FEMALE
| Age | Oct-11 |
Jul-11 | % Change |
| 17-22 | £1,682 | £1,671
| + 0.7% |
| 23-29 | £901 | £911
| - 1.1% |
| 30-39 | £576 | £579
| - 0.6% |
| 40-49 | £591 | £595
| - 0.5% |
| 50-59 | £512 | £513
| - 0.1% |
| 60-69 | £400 | £406
| - 1.5% |
| 70 + | £449 | £453
| - 0.9% |
| Subtotal | £749
| £753 | - 0.6%
|
ALL
| Age | Oct-11 |
Jul-11 | % Change |
| 17-22 | £2,342 | £2,294
| + 2.1% |
| 23-29 | £1,169 | £1,181
| - 1.0% |
| 30-39 | £680 | £682
| - 0.3% |
| 40-49 | £650 | £652
| - 0.4% |
| 50-59 | £533 | £534
| - 0.2% |
| 60-69 | £451 | £458
| - 1.6% |
| 70 + | £524 | £529
| - 0.9% |
| Total | £937
| £939 | - 0.3%
|
— Index
summary:
Market summary
(AVERAGE OF ALL QUOTED PREMIUMS FOR EACH
RISK IN THE INDEX BASKET OF RISKS)
| Average Premium |
Oct-11 | Jul-11 |
% Change | Oct-10 |
% Change | Jul-94 |
% Change |
| Comprehensive | £1,449.85
| £1,438.18 | + 0.8% |
£1,249.71 | + 16.0% | £384.50
| + 277.1% |
| TPFT Fire & Theft | £1,513.03
| £1,510.80 | + 0.1% |
£1,246.41 | + 21.4% | £333.39
| + 353.8% |
Shoparound summary
(AVERAGE OF THREE CHEAPEST PREMIUMS FOR EACH RISK IN THE
INDEX BASKET OF RISKS)
| Average Premium | Oct-11
| Jul-11 | % Change
| Oct-10 | % Change
| |
| Comprehensive | £921.38
| £923.90 | - 0.3% | £791.82
| + 16.4% | Shoparound data only
|
| TPFT Fire & Theft | £1,460.85
| £1,465.23 | - 0.3% |
£1,097.72 | + 33.1% | collated since 2005
|
Price comparison sites: Market summary
(AVERAGE OF ALL QUOTED PREMIUMS FOR EACH RISK IN THE INDEX
BASKET OF RISKS)
| Average Premium | Oct-11
| Jul-11 | % Change
| Oct-10 | % Change
| |
| Comprehensive | £1,053.28
| £1,067.72 | - 1.4% |
£888.84 | + 18.5% | Aggregator data only
|
| TPFT Fire & Theft | £1,280.87
| £1,280.36 | + 0.0% |
£909.02 | + 40.9% | collated since October 2009
|
Price comparison sites: Shoparound summary
(AVERAGE OF THREE CHEAPEST PREMIUMS FOR EACH RISK IN THE
INDEX BASKET OF RISKS)
| Average Premium | Oct-11
| Jul-11 | % Change
| Oct-10 | % Change
| |
| Comprehensive | £682.80
| £696.67 | - 2.0% | £592.08
| + 15.3% | Aggregator data only
|
| TPFT Fire & Theft | £949.27
| £940.72 | + 0.9% | £764.77
| + 24.1% | collected since October 2009
|
October 2011
|
