UK car insurance prices remain in reverse

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Further savings for young drivers keep average premiums in the UK falling. But reductions may be petering out for the mass market.

LONDON, 9 July 2014 - Continuing downward pressure on car insurance prices for younger drivers pushed the overall average cost of a comprehensive policy in the UK down by a further £17 to £579 during the second quarter of 2014, according to the latest Confused.com Car Insurance Price Index, in association with Towers Watson.

Prices for new comprehensive policies fell by an average of 2.8% between March and June 2014, despite the appearance of some modest quarter-on-quarter increases for some age groups and for those living in certain parts of the country. Over the last 12 months, UK drivers have typically seen average savings of nearly 15%, or just short of £100 per policy.

Quarterly reductions for third party, fire and theft policy holders were much smaller at 0.3% but, taken over the last 12 months, prices have still fallen on average by nearly 14% - or just over £150.

The biggest winners by far, in both the most recent quarter and over the last year, have been younger drivers. Average annual comprehensive policy price cuts for all 17-year-olds have amounted to nearly £1,000 (-32.2%) and have averaged over 20% for all those aged under 21. In this younger age group, price reductions in the second quarter varied from 4.3% for 20-year-olds to over 10% for 18-year-olds.

Stephen Jones, UK Head of P&C Pricing at Towers Watson, commented: “This is a record 10th consecutive quarter in which prices have fallen overall even though some parts of the motoring population may not have shared in the latest reductions. What it shows in particular is that the UK motor market is still competing and innovating hard in the younger driver segment.”

He added: “The publication of reports by both the Competition and Markets Authority on insurance repair costs and by the Transport Select Committee on whiplash and small claims have come too late to have much, if any, effect on this latest quarter, but it will be interesting to see if the proposals they contained influence insurers’ actions over the next quarter.”

While it’s good news for nearly all motorists in terms of cost saving, motorists in some geographical pockets are experiencing rising car insurance premiums – particularly those who live in the City of London. Motorists in this area experienced a yearly price increase of 2% - and a quarterly price increase of 11% - bringing the average premium to £1,044 - £465 more than the national average. Other geographical pockets where average prices rose in the quarter included Carlisle (2.5%), Edinburgh (1.4%), Lancaster (1.3%), and Kingston-upon-Thames (1.0%).

However, these increases were balanced out by neighbouring postcode areas, resulting in all regions across the UK seeing average comprehensive price decreases of at least 1.2% in the quarter. Taken over the past year, the smallest regional reduction has been 12.3% in the East Midlands. Drivers in Manchester and Merseyside have enjoyed the biggest annual decreases, averaging £184.

Gemma Stanbury, Head of Car Insurance at Confused.com says: “Once again, it is positive news for motorists as car insurance prices continue to fall, with comprehensive premiums now averaging at just £579. In fact, average prices are now nearly a third cheaper (32%) than this time three years ago during the price peak (£579 v £858).

“However, it’s younger drivers who are the real winners, with 17 year olds seeing their comprehensive car insurance premiums fall by nearly half since their peak just under three years ago, dropping a staggering 46% from £3,729 to £1,997. 

“While it is great news for consumers that premiums are continuing to fall, these ongoing drops in car insurance prices are unlikely to be sustained. We’ve seen premiums reduce continuously over the last couple of years, so motorists should not necessarily expect prices to continue dropping at this rate.”

About the Index

The index is compiled using anonymous data from all enquiries submitted on Confused.com. The prices used for analysis are based on an average of the best five quotes received.

About Confused.com:

Confused.com was the UK's first price comparison site for car insurance. Confused.com is one of the UK’s biggest and most popular price comparison services. Launched in 2002, it generates over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include home contents insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance policies.

Confused.com is not a supplier, insurance company or broker. It provides an objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com’s service is based on the most up-to-date information provided by UK suppliers and industry regulators.

Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is regulated by the Financial Conduct Authority.

About Towers Watson:

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. The company offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has more than 14,000 associates around the world.

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