22 January 2018Insurance

UK car insurance premiums decline

UK car insurance prices fell by an average of 1.3 percent In the final quarter of 2017, the largest quarterly reduction in premiums seen in more than three years, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.

This is also the second consecutive quarterly drop in prices, bucking the recent strong upward trend which saw the average premium rise from £579 in June 2014 to the price peak of £847 in June 2017.

This latest fall in premiums, one of only three quarterly reductions seen since September 2014, means that the average comprehensive premium is now £827 per year, or £11 lower than in September 2017. While average premiums rose by £60, or almost 8 percent, over the last 12 months, this represents a significant deceleration compared to recent Index results which have recorded an average year-on-year increase of £110 for the previous six quarters.

According to Willis Towers Watson, the reduced prices this quarter continue to reflect insurers’ reactions to last year’s announcement of a proposed change in the calculation of the Ogden discount rate, which determines the basis of settlement and so cost to insurers of the very largest personal injury claims.

The monthly version of the Index shows that premiums fell earlier in the quarter but this was followed by a slight counterbalancing increase slightly towards the end of that period, which occurred after the government’s announcement on 30 November for a delay in changes to the discount rate.

Stephen Jones, UK head of P&C pricing, claims, product and underwriting at Willis Towers Watson, commented: “While the second quarterly drop and annual deceleration in premiums will be positive news for drivers, the marginal price increases seen at the end of the year suggest a level of uncertainty and volatility will continue to trouble the market into 2018, particularly concerning the impact of ongoing developments relating to Ogden.”

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More on this story

20 November 2017   The UK motor insurance market’s profitability is expected to approach break even in 2017 and see a strong uplift in profits in 2018, according to EY’s latest UK motor insurance analysis.
1 December 2017   The UK's Justice Select Committee has indicated in a report published on November 29 that it needs more evidence into claimant behaviour before it can approve the proposed reforms to the Ogden discount rate.
24 January 2018   Root Insurance, a car insurance company that operates entirely via mobile technology, has added availability in four new states in the US.