Premium Drivers index

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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Car Insurance Savings variable

The past few years have proved to be an expensive time for UK drivers. Our latest report suggests that insurance premiums have increased – albeit only slightly – in the third quarter of 2018. We’ve seen that prices failed to rebound as much as they typically would after a seasonal reduction in the first few months of the year.

Today, the average quarterly premium – blended across all age groups – has held flat at £731, a small increase of £4 compared with the previous quarter. The savings variable has dropped significantly to 15.46% (between June 2018 and August 2018), leading to the smallest difference between cheapest and average premiums in five years. This is the third consecutive quarter of reductions in the percentage difference between the cheapest and the average policy on the market, down from 16.17% in the quarter ending March 2018.

Our figures show that while the era of price hikes may be coming to an end, motorists are still facing far higher motor insurance premiums when they come to renew their policies than they were a few years ago, especially if they fail to shop around. What’s more, this fall in the savings variable could be good news for drivers as a narrowing gap suggests a higher level of competition amongst providers. This might lead to lower prices as insurers battle to win customers with better offers.

Car insurance prices, premium drivers index

Car insurance prices, premium drivers index

What’s behind the price movement?

According to our research, changes to the personal injury discount rate (known as Ogden Rate), which came into force in spring, continue to impact on premiums. Successive hikes to Insurance Premium Tax (IPT) to its current rate of 12%, in addition to the suggested change to the Ogden Discount Rate a year ago, both put significant upward pressure, as insurers were forced to pass on these additional costs to their customers.

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Simon McCulloch

Director at

Compare the Market

“The past five years have been difficult for British motorists who have faced relentless insurance price rises resulting in extremely high premiums. However, the era of hikes may well be over as our latest data indicates that prices have steadied out after the years of increases.
The hikes were primarily driven by Government changes to IPT and the Ogden discount rate - the impact of which were passed directly onto the consumer. Now with prices holding steady at near record levels, it is essential that the Government takes no further action to punish British motorists whose financial health will inevitably have been impacted by these changes. Without further interventions in the motor insurance market, we can hopefully see premiums avoid any more increases.”

Drivers in Britain are overpaying on their motor insurance by £2 billion

After a number of years of rapidly climbing motor insurance prices, premiums are showing some signs of plateauing. However, Compare the Market estimates that consumers are still overpaying potentially by more than £2 billion a year through automatically renewing their policies.

62% of drivers – equating to approximately 19 million people across the UK – do not switch provider. With the average saving for switching standing at £113.09, consumers are missing out on £2.2 billion of potential savings. The average saving for motorists varies by age group, with young drivers able to save the most money – an average of £326 a year.

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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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