GOOD NEWS! Motor premiums down 7.5% in first quarter Source: Insurance Age | 09 Apr 2014 Categories: Insurer, Broker Price index reveals downward trend has continued. Motor insurance prices have declined again in the first quarter of 2014, according to the latest Confused Motor Insurance price index. The index, which is published in association with Towers Watson, showed average prices down by 7.5% over the last quarter, meaning that comprehensive prices have fallen by around 19% over the past year. This represents a £140 reduction, with average price now standing at £596 – the last time the average premium fell below £600 was in 2009. Confused stated that the scale of price reductions in the first quarter of 2014 had reversed the recent trend, which had appeared to show the market bottoming out in Q4 2013, when premiums fell by 1.1%. The 1.1% decline suggested a more cautious approach from motor insurers to developments in the market, including the ban on referral fees and restrictions on claims legal costs. However, the most recent period has once more seen an acceleration in the rate of premium falls. Benefits Younger drivers have benefited most from falling prices, with the average premium for a 17-year-old dropping by nearly 39% in the last year, while 18-year-olds have also seen reductions of over 30% on average. On a regional basis, comprehensive policyholders in Manchester and Merseyside have received the largest annual average price cuts in the country, amounting to 23% or a price saving of nearly £250. Confused attributed this to fact that these areas have previously been associated with particularly high third-party claims costs and so would be expected to see greater benefit from Laspo and related reforms. Stephen Jones, UK head of P&C pricing at Towers Watson, said: “This quarter’s price reductions are sizeable, even allowing for the fact that motor insurers may wish to be tactically competitive around this time of year due to growing new vehicle registrations and the pattern of market renewal dates.” Optimism He added: “Further contributing factors could include optimism surrounding potential reforms in the medical assessment of whiplash and action which may be taken on third party repair and hire costs. “Another factor to consider is that some insurers declared increased reserve releases when announcing their year-end results, perhaps indicating growing confidence in their understanding of the claims cost impact of recent legislative changes including Laspo.” Jones highlighted the effect telematics is having on the index, and noted: “As well as a growing number of telematics providers on price comparison websites, the frequency with which they are coming up with the cheapest quote, particularly for young drivers, is rising. “Two out of every three drivers aged below 30 are being offered a competitively priced telematics product.” More affordable Gemma Stanbury, head of car insurance at Confused, commented: “The fact that these falling prices are being experienced by drivers of all ages and genders, right across the UK, means that motoring is becoming more affordable for everyone. This is great news for young drivers in particular - 17 year olds have seen fantastic savings over the past year of nearly £1,400 on average. She added: “However, these ongoing drops in car insurance prices are unlikely to be sustained – we’ve seen premiums falling continuously over the last couple of years, so motorists should not necessarily expect prices to continue dropping at this rate.”
Posted on: Thu, 10 Apr 2014 10:28:11 +0000
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