With my car insurance due for renewal in a couple of months it is concerning to read in the Confused.com Insurance Price Index that my premium may increase by as much as 14%. That is what the Index, which is powered by Willis Towers Watson, says has been the average increase in premiums over the last year. The average premium now stands at £797 a year.
The rate of increase in premiums also seems to be increasing with quarter 4 of 2016 seeing rises of 4% in premiums.
Add to that the increase in Insurance Premium Tax from 6% to 10% and public transport starts to look very attractive.
No driver claims Confused.com will escape the premium increases, although some will be affected more than others. (more on this later)
Older drivers, which I am not one just yet will according to the Index continue to see the greatest increases. Comprehensive premiums have never been higher for many drivers in their sixties and seventies – those aged 62 (£481), 63 (£494), 64 (£450), 68 (£515), and 71+ (£495), for example, are all experiencing their highest premiums ever. And at 10%, drivers aged 71+ have seen their biggest ever quarterly increase.
As you would expect, although the cost of car insurance for a teenage drivers is now between 56% and 75% of their maximum ever premiums, the cost of insurance for younger drivers remains, by comparison, with the prices paid by older drivers eye-wateringly high.
If you are under 26 years of age you are lucky if you are not paying more than £1,000 a year. Of course it is the youngest drivers, those aged 17 who pay the most. £2,112 a year. This is four times what the average 60 year old pays
Average premiums for people aged 26 and under are all over £1,000. And, after 18 months of 18-year-old drivers typically paying the highest premiums, it’s the nation’s youngest drivers, those aged 17, who now pay the most (£2,112). Motorists aged 60 and over, by contrast, can still typically expect to pay less than £500 (the exception being those aged 68 who pay £515 on average).
Both male and female drivers have seen their premiums rise substantially over the last 12 months. However, males have seen prices accelerate more than their female counterparts, climbing by 15% (+£104 year-on-year) and 13% (+£84 year-on-year) respectively. Meanwhile, the fourth quarter of 2016 has seen a further jump of 4% for both sexes from the previous three-month period. As a result, the average man’s premium now stands at £812, while for women it is £711.
Since 2012 EU rules have banned insurers from taking gender into account when considering insurance premiums. We have yet to see what Brexit will do to this piece of equality, but it seems that the gap in price between men and women’s car insurance premiums continue to widen. There is now a difference of £101 between the sexes in Q4 2016, the first time the £100 barrier has been broken since the EU rules came into force. By comparison, only two years ago (Q4 2014) the gender price divide was almost half as wide at just £51 and as low as £27 immediately after the rules came into place, with men still paying more on average.
Looking across the UK, increases in premiums can be felt in most areas, with no region escaping an annual price hike. In particular, motorists in Scotland have faced the highest percentage rises over the past 12 months. Those in the East & North East and the Highlands & Islands regions of Scotland, for example, have seen the average cost of their car insurance go up by 20% year-on-year to £563 and £589 respectively – the highest of any UK region. Drivers in the Scottish Borders region haven’t fared much better. They’ve seen a 19% annual price hike, although they can take some comfort in the fact that at £531 they still typically pay the least of any UK region for car insurance.
Meanwhile, despite Scottish drivers generally seeing higher annual percentage rises, motorists in the English capital still tend to pay the most for car insurance of all UK regions. And people in the Inner London region pay the most of all – their average annual fully comprehensive policy stands at £1,237 in Q4 2016. In real-terms this is up £152 year-on-year, the largest monetary increase of any UK region too. Only motorists in Northern Ireland saw anything close to this, where the average cost of a fully comprehensive car insurance policy has risen by £134 over the past twelve months, the second largest actual increase of all UK regions.
Across the UK’s other capital cities, drivers in Cardiff, Wales face an average price of £714, up 14% from the same time last year. Meanwhile, those in the Scottish capital of Edinburgh can expect to pay around half that of a London motorist – £558, up 12% from the previous 12 months.
While the price index tends to focus on fully comprehensive car insurance policies, third party fire & theft (TPFT) premiums have increased too and have, in fact, never been higher. The average TPFT policy now stands at £1,311, up 15% year-on-year and 5% quarter-on-quarter.
Amanda Stretton, motoring editor at Confused.com says:
“Drivers are now paying £95 more on average for an annual comprehensive car insurance policy than they did during the same period in 2015. With the average premium standing at £767, the cost of car insurance hasn’t been this high for over four and half years. What’s more, as prices continue to climb, it seems only a matter of time before we’re back at the 2011 £858 premium peak.
“And it’s not just the price of fully comprehensive policies that have risen over the past 12 months, with the typical third party fire & theft (TPFT) premium at its highest ever cost too. With an average TPFT policy costing £1,311, drivers interested in this level of cover may want to get quotes for fully comprehensive policies too as in some cases it may work out cheaper.
Rising prices make it crucial that I find ways to reduce the cost of motoring wherever I can.
Confused.com advice all motorists like me to shop around using a site such as Confused.com, which they say can help drivers save on their car insurance and slash running costs with their handy tools, tips and guides.
So I am sticking with Aviva and paying less than I did last year!