- Difference between average and cheapest premiums reaches unprecedented high of £123
- Average motor insurance premium hits £714 in Q4, up nearly £60 (9%) year on year
- Britain’s most popular car is the Kia Sportage which has an annual average premium of £389
December 2016 – The cost difference between the cheapest and average premiums in the UK is at its widest point since September 2012, according to the latest data from comparethemarket.com’s motor insurance index, Premium Drivers, as motor premiums continue to soar. Between September and November 2016, the price difference between cheapest and average motor insurance policies reached £123 per motorist – an increase of £17 compared to the same period twelve months before
Over the last month alone, the price of cheapest motor insurance premiums, blended across all age groups, has risen by more than £20 to £608. The average premium has risen even more steeply by nearly £30 to £738. comparethemarket.com expects motor premiums to continue to rise next year, as the ‘savings variable’, its tracker of price competition, has continued to expand consistently every quarter of 2016, showing little downward pressure on prices in the short term.
The winter months historically see a rise in premiums, so this quarter’s results are in part a reflection of the natural seasonal price uplift. Prices also have typically fallen in January and February so the next quarter will be crucial in determining whether this recent rise is merely a seasonal price hike or instead indicates that prices are set to keep spiralling into 2017. The direction of price hikes in 2016 suggests there is more pain to come for drivers next year.
The rising cost of motor insurance can also be attributed to the increase in Insurance Premium Tax (IPT) which has now been increased three times by the Treasury since 2014, doubling the tax from 6% to its new rate of 12% from June 2017. As a direct result of these measures, analysis from comparethemarket.com estimates that drivers will have to pay £109 more for their insurance than they did two years ago.
Analysis by comparethemarket.com also reveals how the cost of owning a car can vary across the country. London is by far the most expensive place to insure a car with premiums costing on average £1,460 – over £800 more than in South West where premiums are less than half that price at an average of £636. T According to our data the Kia Sportage is the nation’s most popular car, costing around £13,688 to buy and with an annual car insurance premium of £389.
Dan Bass, head of motor insurance at comparethemarket.com, said:
“The cost of motor insurance at the moment will be an unwelcome gift for most motorists this Christmas. Jumping from £708 to £738 is a pretty large increase, and one which few motorists can afford to pay. The potential saving of £123 shows that renewal prices and cheapest price quotes are getting further and further apart, which may suggest that insurers are increasingly relying on customer inertia. The only way to mitigate these rises and encourage competition amongst providers is for consumers to shop around.