- Drivers paying average or ‘auto-renewal’ price for their motor insurance spend £107.71 more on average than those paying cheapest or ‘shop around’ price, as difference between cheapest and average premium hits 3 year high
- Average premium across age groups hits £675.61 – highest since 2012
- Premiums for under 25 year olds hit £1000 for first time since February 2013*
The cost difference between the cheapest and average premiums in the UK is at its largest since September 2012, according to the latest data from comparethemarket.com’s motor insurance index, Premium Drivers. The price difference between cheapest and average motor insurance policies currently stands at £107.71 per motorist – the highest point since Premium Drivers data began in September 2012.
Over the last quarter, the price of cheapest or ‘shop around’ motor insurance premiums, blended across all age groups, has risen by £50 to £567.90. The average, or ‘auto-renewal’, premium has risen by almost £60 to £675.61. comparethemarket.com expects motor premiums to continue to rise in 2016, as the ‘savings variable’, its tracker of price competition, has continued to expand gradually, showing little downward pressure on prices in the short term.
The main reasons behind this surge in costs could be the increase in Insurance Premium Tax, the falling competition in the market and a cyclical hardening market.
For younger drivers, prices are escalating. Even if under 25 year old drivers shop around for the cheapest price, they are likely to pay £1000 to insure their car – the highest point since February 2013. The high cost of insurance for young drivers may be slightly offset for savvy shoppers, as under 25 year olds currently stand to save an average of £236 by shopping around for their insurance – whilst those paying an average price pay over £1230.
Simon McCulloch, Director of Insurance, comparethemarket.com, said: “The cost of motor insurance at the moment is not where most consumers would want to see it. Having enjoyed several years of falling prices, premiums are rising sharply. This has not been helped by the recent hike in Insurance Premium Tax, passed more or less directly onto motorists. In this kind of market it is utterly essential people search out the best deals for their car insurance – by automatically renewing you could well needlessly be spending hundreds of pounds extra.
“Young drivers are always at the sharp end of price rises and this cycle of price hikes is no exception. Telematics policies may offer an escape route to these hefty premiums, but only for those drivers who are willing to have their driving monitored.
“The only really good news for drivers at present is the prolonged slump in the price of oil, which should help to drive petrol prices down further, to well below £1 per litre with any luck, and relieve the pockets of motorists. At the very least, the falling price of petrol at the pumps should help offset, at least in a small way, the additional pain that these higher insurance prices may bring.”
*Based on the average cheapest premium for under 25 year olds in November 2015.
All data is sourced from comparethemarket.com.
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 consumer 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.
All premium data refers to motor insurance products featuring either comprehensive, third party fire and theft or third party cover.
SEE FULL REPORT
comparethemarket.com was launched in 2006 and has grown rapidly over the past nine years to become one of the UK’s leading price comparison websites.
comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as, credit cards and loans.
comparethemarket.com actively selects its brand partners, working with the best and most trusted organisations to ensure quality service to consumers.
comparethemarket.com is a trading name of BISL Limited. BISL Limited is authorised and regulated by the Financial Conduct Authority. Registered Address: Pegasus House, Bakewell Road, Orton Southgate, Peterborough, PE2 6YS. Registered in England number 3231094.