UK motor insurance cost near all-time high
UK comprehensive car insurance prices rose 18 percent on an annualized basis to £847 in the second quarter, the biggest quarterly rise in seven years, pushing the cost of UK car insurance close to an all-time high.
The price increase is driven by higher repair costs, the Insurance Premium Tax (IPT) and personal injury claims, according to Willis Towers Watson.
Comprehensive car insurance premiums have continued to rise during the second quarter of 2017, with motorists now paying on average £132 more than they were paying in 2016, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson. This is the biggest quarterly rise recorded by the index since 2010, based on price data compiled from almost two million customer quotes each month.
The latest increase means that the average comprehensive premium has now reached £847, an 8.4 percent rise during the second quarter of 2017 alone, and just £11 short of the most expensive premiums recorded in 2011 (£858). With the exception of the first quarter of 2016, when prices experienced a brief plateau, the underlying price trend for the last three years has remained steadily upwards.
The latest rise in prices reflects the recent increase in IPT, which has been rising since July 2015 and increased to 12 percent, as well as a reaction in pricing to the recent marked reduction in the Ogden discount rate, which Willis Towers Watson has previously estimated will cost insurers and reinsurers up to £5.8 billion.
Another significant driver of rising premiums is the continuing increases that insurers are seeing in the cost of vehicle repairs, fuelled by Brexit’s impact on car part prices and by greater repair complexity as the level of expensive technology in vehicles increases, according to the press release. A new Civil Liability Bill, which could save motorists around £35 per year through measures including a ban on drivers making claims without medical evidence, is unlikely yet to have impacted the Index figures.
“Another increase in Insurance Premium Tax, the Lord Chancellor’s cut to the Ogden discount rate, and the continued Brexit-related weakening of Sterling, when overlaid on underlying high levels of vehicle repair cost inflation, have reversed the recent trend of reducing annual increase rates for comprehensive motor prices,“ said Stephen Jones, UK head of P&C pricing, claims, product and underwriting at Willis Towers Watson. „We will continue to monitor repair cost inflation trends closely though our claims benchmarking service and our work with suppliers of vehicle technology options data.”
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