Premium Drivers index

Each quarter, Compare the Market publishes research on the latest savings for car insurance premiums by comparing our ‘cheapest’ and ‘average’ motor premiums across all age groups to determine something we call the ‘savings variable’. The results help to give you an idea of how much it would pay to shop around for your car insurance, instead of simply auto-renewing with your current provider. In general, the higher the savings variable is, the more you could save by comparing prices.

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Our latest report suggests that insurance premiums have fallen by an average of £2 – and are now at their lowest level for three years. The decrease in premiums over the last three months is good news for UK drivers. While premiums have historically fluctuated throughout the year, the reduction in premiums is more pronounced this year, indicating a more structural fall in premiums.

Car Insurance Savings variable

Today, the average quarterly premium – blended across all age groups – has fallen to £707, a decrease of £2 compared to £709 in the previous quarter. A reduction in car registrations could also have caused providers to compete in a shrinking market.

Meanwhile the Savings Variable in June – August 2019 has narrowed over the past three months to 15.39%, down from 15.64%. The savings variable has remained significantly lower than its peak of 17.62% in the first quarter of 2017. The large difference between the average and cheapest premium two years ago suggested that drivers were failing to shop around, resulting in a reduction in competition.

As savings variables are experiencing a downwards trend, drivers may be assured that competition within the car insurance market appears to be again on the rise. However despite downward pressure on prices, the fact remains that drivers are still facing far higher motor insurance premiums, especially if they fail to shop around.

Drivers fork out an estimated £7.8bn on policy premiums

A reduction in premiums since December is most likely a result of a number of Government changes, such as hikes to Insurance Premium Tax (IPT) and changes to the personal injury discount rate.

The new Policy Premiums report from estimates that these changes have cost British motorists an estimated £7.8bn. This figure brings to light the scale of financial damage that changes to IPT and the personal injury discount rate have had on drivers over the past few years, having added £208 to the cost of car insurance from 2015 to date.

We can expect that these changes will likely keep premiums comparatively high for the foreseeable future until any further reforms are implemented.

Dan Hutson

Dan Hutson

Head of Motor Insurance

Compare the Market

“After years of relentless premium hikes, there is finally some light at the end of the tunnel for British motorists. Premiums are now lower on both a quarterly basis and a year on year basis. Car insurance, like many markets, is cyclical.

“While premiums are calculated using a variety of factors, supply and demand plays a fairly large role in the average pricing of these products. For example, the volume of new cars coming onto roads has decreased in recent months which could have been the cause behind this latest fall as insurers try to snap up new customers with lower prices.”

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Past reports

We carry out this research every quarter to find out what the current landscape means to you when it comes to buying your car insurance. Here you can see our previous reports to see how the industry has changed over the past year and what this means for your car insurance premium.

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