The combined cost of home and motor insurance fell last year by 4.3% according to the British Insurance Brokers’ Association (BIBA) and Acturis Insurance Price Index.
The index, which was launched last year and analyses nearly £5 billion of annual premiums, has shown that home cover reduced by 4.1% and motor by 4.4% in 2014, compared to 2013.
Small and medium sized enterprises are in particular benefiting from reducing premiums. The SME basket of the index, which includes the cost of a commercial vehicle and a commercial package policy, has shown a reduction of around 2% in 2014 compared to 2013. This is largely driven by the reduction in commercial vehicle premiums which saw reductions in Q4 2014 of 6.3% compared to Q4 in 2013.
In comparison, average premiums have remained fairly flat for larger businesses in 2014, although there is evidence that liability premiums increased by 3.4% in 2014 compared with 2013. The index, which is able to search track premiums back to 2010, has also found that liability premiums have increased by 6.8% since then, which BIBA says could be connected to an increase in liability claims.
Graeme Trudgill, BIBA’s executive director, said that the index showed real benefit to customers.
“The insurance industry is very competitive and has also committed to a number of initiatives to reduce insurance costs for families and businesses,” he said. “Customers should see these reductions in their premiums and if in any doubt about the cost or coverage of their insurance, should speak to an insurance broker.”
Theo Duchen, co-CEO of Acturis, said: “In the period from 2010 to 2014, it looks as if inflation as measured by the Consumer Price Index (CPI) will total some 12-14%.
“In the same period, the increases in the various BIBA-Acturis insurance indices are 2.5% for the consumer index, 9.6% for the SME index and 1.2% for the mid-market Index – all well below inflation for the same period. This underlines how competitive the market for general insurance is in the UK and the fact that consumers are getting a good deal in the sense that the real price for this service is falling year on year.”
Steve White, BIBA’s chief executive, said that the index had also proved to be invaluable when speaking to the Government and other external stakeholders about the industry and the role that insurance brokers played within it.