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.
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Our latest report suggests that insurance premiums have risen for consecutive quarters, up to an average of nearly £755, from a previous average of £730 What’s also noticeable is the size of the increase, which is consistent to the previous quarter’s, which jumped from £707.
Car Insurance Savings variable
The savings variable is the figure given to the difference between the cheapest and average car insurance quote. Today, the average quarterly premium, across all age groups, has risen to nearly £755, an increase of £24 compared to £730 from the previous quarter. Meanwhile, the savings variable between December 2019 and February 2020 has expanded over the past three months to 15.98%, up from 15.49%.
After the savings variable had been falling steadily since Q1 2017, when it reached a high of 17.62%, we’re starting to see a consistent rise, with an increase for the second consecutive quarter. However, despite rising overall, the savings variable actually fell throughout the course of the last quarter, starting at 16.35% in December 2020, before falling consecutively to 15.75% by February 2020.
With a consecutive increase in the savings variable, we could start to see less competition between car insurance providers. This may later lead to more expensive premiums for drivers in future.
Want to check that you’re paying the right price for your premium? Use our interactive comparison tool to see the average premiums for similar drivers to you.
Premiums Continue To Rise
After last quarter reversed the trend and saw premiums back on the rise, the start of 2020 has seen that increase continue. The average car insurance premium in Q1 2020 has increased significantly, after an already significant increase towards the end of 2019.
With the new average car insurance premium standing at £755, it is only just short of the all-time high of £758 seen in Q4 2017. This compares to an average of £559, back in Q4 2012, when Premium Driver records began.
The rise is largely driven by a number of Government changes, which include increases to Insurance Premium Tax, as well as changes to the personal injury discount rate. Meanwhile, the delay in changes to whiplash claims may also have prevented premiums reducing. These changes are now pushed back until August 2020
Head of Motor insurance at Compare the Market
“Following a period of reducing premiums, motorists will be disappointed that premiums have continued to rise. This spiralling cost of insurance is thanks, in part, to hikes in Insurance Premium Tax. IPT remains a fundamentally unfair tax, as those that can afford it least pay the most. IPT is calculated as a percentage of the annual cost of insurance which means that those who have higher premiums pay higher tax.
This unfairly penalises young drivers, who usually pay higher premiums. The rising cost of running a car, particularly for younger people, is making driving a luxury for many who see it as necessity.”
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.