Car insurance premiums have increased for the 4th quarter in a row, according to our latest Premium Drivers report. Our latest findings suggest that the average car insurance premium rose by £71 in 2015. What’s more, we’ve found that the difference in price between the cheapest and average premium now stands at over £110- which is the largest gap we’ve seen since starting the study in 2012.
Premium Drivers, our quarterly report on car insurance premiums, looks at prices across the market to let you know whether your insurance premiums are on the rise and just how much you could stand to save by shopping around. From December 2015 to February 2016, we’ve found that the savings variable has maintained its position at 16.2%, meaning that the average difference between the cheapest price on the market and the average price presented in the last quarter was a whopping £110.
In the last quarter, we’ve seen both the cheapest and average car insurance prices rise meaning that most of us are likely to pay more for our insurance than we did this time last year. In fact, the average price presented to customers on our site has risen from £561.10 in February 2015 to £659.32 in the same month this year. This shows that premiums are on the increase for everyone and it’s likely to hit most of our pockets hard this year.
But the good news is that for those who are in the market to switch, you still stand to save money. Our research shows that the cheapest price presented to customers in the last month was coming in at £552.95- over £100 cheaper than the average price on the market.
And for those under 21, switching could help save even more. According to the report, the average price presented to 17-20 year olds from December 2015 to February 2016 was a huge £1482.90. In comparison, the cheapest price offered during the same period was £1162.46- a whopping £320.44 cheaper!
This could be down to the rise in telematics policies, which are proving ever popular. As we outlined recently, the British Insurance Brokers’ Association (BIBA) reported a 40% increase in the number of telematics policies put live in the last year. In fact, their survey showed that there are nearly 455,000 telematics policies now live in the UK. And from our own research, we can see that telematics policies are now the cheapest policies available in over 25% of car insurance quotes.
But why are prices in general on the increase? Well, it’s no coincidence that insurance premiums started to rise after the Chancellor announced the increase in Insurance Premium Tax back in September. The 3.5% tax increase, which was originally intended to target insurers not customers, seems to have had a direct effect on the car insurance premiums being offered.
Simon McCulloch, our Director of Insurance, said “Unfortunately, the rise of motor insurance premiums does not seem to be going away any time soon. While external factors like the Insurance Premium Tax hike will have inevitably pushed up premiums, it seems that the inertia of some motor insurance customers has been the real driver of the premium increase.
“By not shopping around, consumers are inadvertently sending a message to insurers that they are happy to pay more for their cover. Increasing competition in the market place is the only way to truly reduce prices and, for motor insurance, that means getting more people switching.”
So, with premiums on the rise, it’s more important than ever to make sure we’re all comparing car insurance prices when it comes to renewal. If you want to see how much you could save by switching, you can compare car insurance prices now and find the best deal for you.
Premium Drivers tracks the “savings variable”, which is the difference between the average and the cheapest motor premium prices across all age groups. This measure gives an indication of the level of price competition currently associated with motor insurance premiums.
When the average price is referred to, this is the mean average of the top five cheapest prices presented to a customer, where a customer has clicked through to buy. Buying from the top five cheapest prices presented represents 90% of all car insurance sales. When the cheapest price is referred to, this is the average cheapest price presented, where a customer has clicked through to buy.