25 July 2006

Motor Insurance Premiums Look Set to Rise | Cheap Car Insurance and Home Insurance from Confused.com

The latest Car Insurance Price Index research from www.confused.com reveals that premiums continued to fall in the last quarter, but suggests that the market may be bottoming out ahead of an increase later in the year.

Reflecting the trend of recent years, the price of car insurance dropped for thousands of drivers from April to June in 2006, however the figures raise questions over the sustainability of such pricing strategies and indicate that the pattern looks set to reverse in the coming months.

Based on its database of over 4 million customers Confused.com has seen the average national car insurance premium dip from £555.66 in the first quarter of 2006 to £554.96 in the second quarter of the year. Although not insignificant, this actually represents a relatively small decrease compared to earlier months and may indicate a levelling out of prices ahead of an increase across the market in the third quarter.

Commenting on the latest Car Insurance Price Index figures Debra Williams, Managing Director of Confused.com said: “We have seen aggressive pricing policies over recent years, which has encouraged the entire market to become fiercely competitive. However this has only been achievable by insurers using reserves that had been set aside for claims in earlier years. In essence this has kept premiums artificially low but as these reserves are used up it is inevitable that premiums will have to increase in order to recover costs.

“If prices do start to rise customers who fail to shop around for a good deal, are likely to be stung, as loyal customers tend to get the poorest deals. As insurers vie for profitable customers in a bull market the shape of the competition is likely to change and hence those motorists that look at the full range of car insurance options are likely to end up with the best deals.”

Among the other key findings of the research, Confused.com discovered that the North West remains the most expensive area for insurance with average premium standing at £703.29 (21% higher than the national average).

At the other end of the spectrum the South West is the cheapest area with average premiums of £456.78, almost 18% lower than the national average.

Editor’s notes:

• www.confused.com provides a free, real-time service to drivers, which instantly compares prices from over 97% of the online insurance market, bringing back a full list of premiums in under five minutes. The service typically saves new users an average of £150 on their annual premiums.
• The Confused.com Car Insurance Price Index calculates the Insurance Price Index based on all drivers currently on its database, which stands at in excess of 4 million drivers.

Car Insurance Price Index tables for 2nd quarter 2006:

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