Car insurance rises by 9.4% – and there’s more to come, says Consumer Intelligence

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Drivers are facing average insurance bill increases of 9.4% – more than four times the rate of inflation, according to new research from Consumer Intelligence.

The specialist marketing agency has said that average prices hit £661 during the year up to February and action to cut the discount rate governing payouts in major personal injury claims and another increase in Insurance Premium Tax mean they will continue to accelerate.

Motorists in London and the North West pay the highest average premiums of more than £900 and are seeing the biggest average increases as claim costs in both areas climb. 21 to 24-year-olds pay the most at £1,176 a year compared with £372 a year for over-50s and £647 for those aged between 25 and 49. Prices for 21 to 24-year-olds have only increased by 3.9% since October 2013 compared with 35% for over-50s and 25.7% for 25 to 49-year-olds.

There is some good news for younger drivers however. Premiums for 21 to 24-year-olds are rising slightly more slowly at 7.8% a year thanks to increasing use of telematics.

John Blevins, a pricing expert at Consumer Intelligence, said: “There are already signs that the discount rate ruling is having an impact on premiums and the next IPT rise in June will add to the pressure.

“There were signs that price rises were levelling off but that is sadly no longer the case with all indications now that the only way is up. With inflation running at 2.3% it is clear that drivers, who have no choice over whether to buy insurance, are facing a squeeze on their budgets.

“Black box technology is helping younger drivers to some extent while the price rises for over-50s at around 10.8% a year reflect how insurers are adjusting risk to reflect the fact that our ageing population is driving for longer.”

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Marek Handzel

Marek Handzel is the editor of Claims Magazine. Marek welcomes articles, letters, or feedback from readers and can be reached by emailing marek.handzel@barkerbrooks.co.uk