Q3 2018 car insurance premium increase is first rise in year


Comprehensive car insurance prices rise by 1% (£8) to £760 in Q3 2018, but still decrease by £78 over the past year

Comprehensive car insurance premiums increased by an average of 1% (£8) in the third quarter of 2018, suggesting a stabilisation in prices after previously falling at their fastest rate compared to the last time prices dropped in 2014. That is according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.

This small increase brings an end to the series of quite significant price cuts across four consecutive quarters from Q3 2017 to Q2 2018, which saw premiums fall to £752 following a price peak of £847 in Q2 2017.

UK motorists are now paying £760 on average, which is still £78 (9%) less than they were paying this time last year, according to the most comprehensive car insurance price index in the UK, which is based on price data compiled from more than six million customer quotes per quarter.

Stephen Jones, UK Head of P&C Pricing, Claims, Product and Underwriting at Willis Towers Watson, commented: “The significant reductions seen over the past year would have been difficult to sustain due to ongoing pressures on repair costs and the continued uncertainty surrounding both the timing and impact of the Civil Liability Bill and the anticipated adjustment to the Ogden rate1.”

In response to the unveiling of the Civil Liability Bill in March, which proposed reforms to the way the largest personal injury and smaller whiplash claims are calculated, insurers may have begun to price in the anticipated claims cost reductions, contributing to the recent fall in prices. However, the government legislation is still making its way through parliament and, as previously warned by Willis Towers Watson, Brexit could delay its passage and any benefits to insurers, pushing back its implementation date from April 2019.

Comparing the regions, drivers in the South West of England saw the largest quarterly rise in prices at 3%, increasing their annual premiums to £566 on average, however they still benefit from the cheapest prices across the board. Meanwhile, drivers in Northern Ireland experienced the greatest quarterly drop with their insurance premiums falling on average by over 2% to £873.

More locally focused data shows drivers in Kirkwall experienced the greatest quarterly rise of 22% (£130), taking the average cost of premiums in the area to £712. Motorists in Kirkcaldy followed with a rise of 9% (£47), increasing premiums to £571. Despite benefiting from a fifth consecutive quarterly price drop, East London remains the most expensive location in the country for car insurance, with motorists paying on average £1,315. The cheapest place for motor insurance in the UK is also unchanged with drivers in Llandrindod Wells benefiting from a further 2% fall in prices and an average premium of £513 in the last three months.

As ever, male drivers aged between 17 and 20 are still paying the most of any demographic  ̶  £2,306 on average. However, those that experienced the greatest quarterly rise were female drivers aged 71 and over, who saw a 4% price increase taking their annual premiums £424.

Stephen Jones noted: “While this latest rise is minimal, the flattening of the recent dramatic fall in prices provides some comfort for insurers who have weathered an extremely competitive recent market. In addition, they face a number of uncertainties that are likely to trouble the market well into 2019, particularly concerning the risk that Brexit negotiations will impact the timing of changes to the Ogden discount rate.”

Steve Fletcher, Head of Data Insight at Confused.com, comments, “Despite the decline in car insurance prices we have witnessed over the past year, it seems premiums are going up again and this time following a drop of just £1002.

“The last time we saw a downward trend, premiums dropped by £279, but over a much longer period of three years3. The data from this quarter suggests premiums are on the up and this time starting at a much higher base, which could mean the cost of car insurance could reach new highs. We expect this is due to drivers adopting vehicles with increasingly advanced technology, which makes for more expensive claims. It could also be a reflection of the uncertainty that surrounds the UK with Brexit on the horizon.”