AA insurance index shows car and home insurance premiums tumble

The-UK-car-and-home-insurance-premiums-continue-to-fall-according-to-AA-research

Premiums for car insurance fall for third consecutive quarter

AA condemns con-artist claim firms ‘masquerade of respectability’

Car premium falls reflect Civil Liability Bill expectations

Home premiums stall after sustained increases

The average Shoparound price for an annual comprehensive car insurance policy is slightly less than it was a year ago, while the average combined home buildings and contents policy quote has also fallen over the first quarter of 2018 according to the latest AA British Insurance Premium Index.

Car insurance

Car insurance premiums peaked at their highest average cost ever during the second quarter of 2017 following sustained increases over three years; but have fallen steadily since then to an average Shoparound quoted premium of £660.64, which is just 0.7% or £4.83 cheaper than this time last year and 2.0% or £13.42p less than the fourth quarter of 2017.

The AA’s Shoparound index reflects an average of the five cheapest prices from a range of insurers quoted by brokers, price comparison sites and direct against a fixed nationwide basket of ‘customers’. 

Michael Lloyd, the AA’s director of insurance comments: “This is a glimmer of good news for drivers who are facing rising fuel prices and increased vehicle excise duty rates.

“Insurers’ confidence in offering lower quotes is boosted by the Government’s Civil Liability Bill commitment to review the so-called Ogden or ‘discount rate’ which affects the value of compensation pay-outs to severely injured victims of car crashes, as well as clamp down on the whiplash claim culture.

“This particularly affects premiums for young drivers who tend to be involved in more catastrophic crashes, and pay much higher premiums, than any other age group.”

Compensation ‘con tricks’

Lloyd has also welcomed the Government’s commitment in the Civil Liability Bill to reform the ‘compensation culture’ that makes it easy for unscrupulous cold-call claims management firms to prey on victims of collisions that weren’t their fault; and persuade them to make a claim for injury that they may not have suffered.

“This is nothing short of fraud and it costs insurers millions of pounds either defending such claims or making payments for injury claims they can’t prove didn’t happen.

“These con-artists often attempt a masquerade of responsibility by using names similar to other organisations, such as the AA or as pseudo-governmental departments.

“We are receiving a lot of messages from concerned AA Members saying that someone is calling them claiming to be from the AA ‘about an accident you had that was not your fault’ and saying they could get big pay-outs for whiplash injury. 

“These cold-calls certainly do not come from the AA.  They come from apparently ordinary telephone numbers to get around ‘withheld’ call blockers but, if you call back, go no-where,” Lloyd says.

“This underlines the disgracefully underhand nature of such firms which, if successful in making a claim against a third-party insurer, stand to earn thousands of pounds in legal fees and costs, on top of a compensation payment for the victim.

“This must be stopped and I welcome moves in the Bill to stop such practices which are already on the borderline of legality.  It is in the interests of every driver that the whiplash culture is stamped out. 

As announced by the Justice Secretary last month, the civil Liabilities Bill is now going through parliament and if it becomes law in the Autumn; and should take a big step forward in stamping out spurious whiplash injury claims and the predatory activities of cold-call claim firms. 

“In the competitive car insurance market, firms including the AA, will reflect savings they make in the premiums quoted – which the Government suggests could be as much as 35%,” adds Lloyd.

According to the Index, young drivers continue to pay the largest premiums for their cover.  Men aged 17-22 pay on average £1,766.17 for a year’s comprehensive cover, while women in the same age group can expect to pay £1,505.28.

Although gender equality has been in place for more than five years, young men tend to drive more powerful cars and cover greater annual mileages, than women; and thus command higher premiums.

The cheapest age to insure a car is 60-69, with an average quoted premium of £403 with a small difference between genders.  Above this age group premiums begin to rise.

Home insurance

Average Shoparound quotes for home buildings, contents and combined policies all fell over the quarter but remain higher than a year ago, according to the AA’s British Insurance Premium Index.

Standalone buildings policies increased over 12 months to an average of 5.1% or £5.74 to £117.47, despite a small fall over the quarter of 0.4% or 42p.

Contents policy quotes increased by 0.4% or 24p compared with this time last year, but over the quarter fell 1.5% or 89p.

The average quote for a combined buildings and contents policy increased by 4.8% or £7.36 to £161.75 over the last year, although over the first quarter of 2018 fell by 0.3% or 42p.

Michael Lloyd, the AA’s insurance director says: “Despite the increases over the year home insurance remains good value.  The average premium for a buildings policy is the same as it was at the beginning of 2011; but reached an all-time peak of £120.94 in the last quarter of 2011. 

Lloyd suggests that the rise in buildings policy premiums, since a low of £97.08 at the end of 2015, has several possible reasons.

“Industry concerns over climate change and the greater likelihood of severe weather causing damage to buildings is ever present.  In addition, the weak pound has led to rises in the cost of imported building materials which means repairs are more costly, while there has been a rise in the number of ‘escape of water’ claims.

“However, since 2015 the burden of Insurance Premium Tax (IPT) has doubled.  This is nothing more than a tax on responsible people protecting their property and should not be increased.”