The savings variable has stayed at 16.2% for the period December 2015- February 2016, according to our latest Premium Drivers report. The savings variable has remained at 16.2% for the second quarter running, despite the fact that car insurance premiums are on the rise.
That’s great but what’s a savings variable?
The savings variable is a unit of measurement created for our quarterly Premium Drivers report. It refers to the difference between the average and the cheapest car insurance premiums across all age groups. We take the top five cheapest prices presented to a customer and work out the mean- this then becomes our benchmark ‘average’ premium. We then compare that to the cheapest price that’s offered to customers when they click through to quote. The difference between those two prices creates what we refer to as the savings variable.
What we’ve seen in this latest report is that the savings variable has remained stable at 16.2%. This follows a small increase of 0.4% from June to August 2015 and means that the difference between the two prices being offered to customers remains the same. To give some context, the higher the savings variable is, the more you could stand to save by shopping around. So, back in November 2014 when the saving variable was 17.1%, the difference between the average car insurance premium price and the cheapest price presented on our site was the highest it’s ever been.
So why is the savings variable stagnant now? Well the lack of change in the savings variable suggests that competition in the market has lessened. This could be down to the IPT increase and seasonal trends which have contributed to the rise in both the average and cheapest prices available.
Simon McCulloch, our Director of Insurance, comments, “As external pressures continue to weigh on pricing, it’s surprising that the savings variable has not decreased somewhat. An increase in insurance premiums is often followed by increased competition.
“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 insurance premiums on the rise, it’s more important than ever that we switch to save. You can compare car insurance prices now and make sure that you’re getting 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.