Car insurance prices U-turn for the first time in three years
Savings not being passed on to loyal customers - 70% say their renewal car insurance premium went up as prices drop
Posted on 16 Apr 2018
• Good news for drivers as car insurance prices fall by -£13 (-2%) since last year – but motorists are still paying £768 on average.
• 59% of drivers renewed with the same insurer according to a survey of UK drivers1 – even though motorists said their renewal premium went up £45 on average1.
• Insurers soften prices after Government announces a review of the Ogden Rate discount and reforms to the law on whiplash2.
• Confused.com CEO, Louise O’Shea, urges drivers to check their renewal quote and shop around as research shows renewing customers are not benefitting from savings.
Drivers are celebrating an unexpected U-turn in car insurance costs as prices drop for the first time in three years. But new research shows 70% of loyal customers are not benefitting from these savings1.
Car insurance is now £768 and -£13 cheaper than it was 12 months ago, a small win for drivers after facing a raft of price rises in recent years. That’s according to the most comprehensive car insurance price index in the UK based on more than six million quotes a quarter from Confused.com and powered by Willis Towers Watson.
However, new research reveals customers who renew with the same insurer are not benefitting from these savings. In fact, a nationally representative survey of UK drivers reveals those who stayed with the same insurer and renewed their car insurance between January and March this year saw their premiums go up by £45 on average1. This suggests loyal customers who choose to stay with the same insurer are not taking advantage of price reductions available by shopping around. And worryingly 59% stayed with the same insurer rather than seeking out a better deal elsewhere1.
Insurers seem to have softened prices as the Government announces a review of the Ogden Rate discount2, expected in April 2019, which could mean insurers pay out less when a claim is made. The Government has also announced a reform to the way whiplash claims are calculated and paid2 which may have also had an impact. The significance of these announcements can be seen within the last three months (Q1 2018) especially, as Confused.com’s index reveals prices dropped by a whopping -£59 (-7%).
But the research suggests customers who are savvy enough to shop around are more likely to see these savings reflected in their car insurance premium. Confused.com CEO, Louise O’Shea, says drivers should check their renewal notices to see if these savings have been passed on to them. She also says they should shop around to take advantage of even greater savings to make sure they get the best deal available. And to help motorists take advantage of declining prices Confused.com is guaranteeing to beat their car insurance renewal price, or give them the difference plus £20.
These unexpected price reductions seem to be a result of insurers over-inflating their prices when the Government set the Ogden Rate Discount to -0.75% in March last year2, as well as an increase to Insurance Premium Tax3. And this means we will have to see prices drop by -£269 before drivers benefit from the rock-bottom premiums of 2008 (Q2), when car insurance cost just £499 on average. In fact, prices are still +£97 (+14%) more expensive than they were two years ago, and +£261 (+52%) more expensive than they were 10 years ago.
Despite recent price drops, some drivers are facing more expensive car insurance costs than others – particularly male motorists. Men are paying £95 more than women, although the gap has closed somewhat since the previous quarter when it was £114. Insurers are unable to assess a driver based on their sex, as outlined by the EU gender directive, but there are other risk factors which cause men to have higher premiums. For example, men tend to drive more expensive cars with larger engines, on average, so they make higher-value claims4. They also tend to have significantly more motoring convictions than women.
And there are certain age brackets which are bucking the downward trend. In fact, 68 year olds will be groaning as their premiums rise by £40 (+8%) since last year. However, they are only paying £543 - significantly less than the national average. 21 year olds also saw an increase, with their premiums going up £38 (+2%) policy to £1,621. But it’s 18 year olds who are currently paying the most for their car insurance, as they face bills of an eye-watering £2,114 on average.
Of any age, 17 year old drivers are celebrating the biggest price reductions and are paying -£118 (-6%) less than they were last year, and -£201 (-9%) less than drivers of this age bracket who took out a policy three months ago. Yet, the average car insurance policy for a 17 year old driver is still a whopping £2,003, making it crucial for them to shop around when it comes to renewal.
As ever, male drivers aged between 17 and 20 are still paying the most of any demographic ̶ £2,348 on average, compared to the £1,699 paid by their female counterparts. While female drivers aged between 61 and 65 are paying the least and less than half the national average, with a bill of just £363.
Looking to the regions, motorists in Scotland will be driven to shopping around for better deals as their premiums buck the downward trend and they face another swathe of annual price increases. Motorists in the Scottish Borders have seen an increase of +£32 (+6%) since last year, now paying £579. Outside of Scotland, motorists living in Central and North Wales saw the second biggest price rise, with premiums up by +£10 (+2%), now paying £629. However, drivers living in Inner London are celebrating the biggest price reduction, making savings of -£81 (-6%) since last year and -£104 (-8%) than those buying car insurance three months ago. While drivers living within Inner London are enjoying these cost decreases, they are the only motorists who can expect to pay over £1,000 for car insurance, on average.
On a more granular level, despite the recent price rises, all areas of the UK are paying more than they were two years ago. Drivers living in Galashiels saw their premiums go up the most since last year, reflecting a price rise of +£52 (+10%) to £577 on average. Yet the Hebrides is the only area to see car insurance costs go up over the last three months – a rise of +1% equivalent to +£7, bringing the average premium for this area to a pricey £724. And while there has been some respite for drivers in East London with car insurance dipping by -£154 (-10%) since last year, they are still paying the most for car insurance of any area in the UK. Motorists from this area are paying £1,360 on average – a huge incentive for them to hunt around for the best deal.
According to Confused.com survey research, almost two out of three (63%) drivers say they are fed up of the rising cost of car insurance1. In fact, one in three (32%) would go as far to say that it’s becoming unaffordable1. But there are other motoring costs which are also pinching drivers’ pockets. According to Confused.com’s fuel price index, which collates prices from 83% of the UK’s fuel stations5, drivers are now paying 120.8p for petrol and 123.4p for diesel, on average. This means that the average driver of a medium-sized car is now paying £68.83 for a full tank of petrol and £70.37 to fill up with diesel. And with further taxes being imposed on diesel drivers this year, plus climbing interest rates predicted for 2018, it looks like it is going to be an expensive year for motorists.
Louise O’Shea, CEO at Confused.com, says: “Finally drivers have had some good news with the end of rising car insurance costs in sight. However, it’s clear that many motorists are not seeing these savings reflected in their renewal letters, so it’s more important than ever to shop around if they want to get a better deal.
"Being loyal doesn’t always pay, so to get the message across to cost-burdened drivers the team and I are guaranteeing to beat the price insurers are charging at point of renewal. If we can’t beat it, we’ll give you the difference, plus £20.
"Please take a few minutes to check your letter and get a new price from Confused.com. We could easily save you almost £3006.”
- ENDS -
Notes to Editors:
More than six million quotes are used in the construction of each quarter’s insurance price index - this makes it the most comprehensive insurance index in the UK. Unless otherwise stated all prices referred to are for comprehensive cover.
The following web pages will be updated to reflect the new figures and can be linked to: http://www.confused.com/car-insurance/price-index
1. Statistics obtained from a national representative survey to 2,000 UK motorists. The survey ran between 05/04/2018 and 09/04/2018.
4. Car insurance for men is on average higher than for women, for example because certain male-dominated occupations are higher risk to insurers, which is reflected in the premium charged. Also, on average, men drive larger and more costly vehicles. For example, according to Confused.com’s quote data, the average female quoter’s car has a 1500 cc engine, compared to 1800 cc for men. Women are most likely to quote for an engine between 1200-1600 cc, men are most likely to quote for a 1600-2000 cc vehicle. Men have twice as many motoring convictions as women. Men drive, on average, vehicles around 10% older and more expensive than women. When men make claims their value averages 15% more than women. http://www.confused.com/eu-gender-directive/~/media/docs/eu-gender-directive-factsheet.pdf
5. Confused.com’s fuel price index collates prices from 7074 out of 8496 fuel stations across the UK. Prices are updated every week: https://www.confused.com/on-the-road/petrol-prices/fuel-price-index
6. Based on online independent research by Consumer Intelligence during (February '18). 50% of car insurance customers could save £286.
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Launched in 2002, Confused.com was the UK's first digital marketplace for car insurance and is one of the leading brands in the sector, generating over one million quotes per month. It has expanded its range of comparison products over the years to include home insurance, van insurance, motorcycle insurance, and car finance comparison, as well as a number of tools designed to save consumers money.
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