Motorists should brace themselves for further rises in the cost of car insurance policies, as competition levels in the market continue to fall.
In its latest Premium Drivers report, comparethemarket.com highlights that, unlike in previous years, competition in the market has not rebounded after reaching its annual seasonal low point in December.
The report concludes that this ongoing reduced competition has driven motor premiums up. They now stand some way ahead of where they were this time last year. At the end of May 2015 the average premium stood at £588.18 - £62.24 more expensive that in May 2014. Similarly, the cheapest premium across all age groups was £493.77, which is £42.54 more expensive than at the same point last year. Add to that the fact that premiums are up on the last quarter - May 2015's cheapest price was £17.11 more expensive than March 2015's figure - and the evidence points clearly to a prolonged uptick in motor insurance prices. (See chart below)
Commenting on the results, Simon McCulloch, Director of Insurance, comparethemarket.com, said: "Early this year it became apparent that we were entering a period in which motor premiums were set to rise. This upward trend has continued through the last quarter and motorists may be increasingly shocked when they open their renewal notices. It seems unlikely that prices will be coming down in the foreseeable future, so it is really important that motorists are aware that shopping around for a new policy could save a lot of money. Whilst competition in the market is dwindling, there could be a large difference between quotes at the point of renewal and for a new policy, as insurers offer relatively competitive prices to attract new customers."
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. The latest report shows that the savings variable hovered resolutely around the 16% mark for much of the past quarter and ended the period to 31 May at 16.1%. This is just another indication that motorists are facing up to the prospect of higher insurance premiums when they seek to take out a new policy this year.
Notes to Editors
All data is sourced from comparethemarket.com.
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.
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