Car insurance bills are rising five times faster than inflation, but the Government’s proposals to increase the Discount Rate have helped stabilise prices, according to Consumer Intelligence.
The market research agency says that prices have slowed down in the past three months but tax rises, the weakness of the pound and rising claim costs mean premiums are still set to climb. Average premiums rose by 14.6% in the past year, five times more than the 2.9% the inflation rate.
Average premiums for over-50s rose by 16.5% in the year to September, but their bills are the lowest at £434. Premiums for under-25s rose by 11% as increased use of telematics, or black box technology, kept prices down. But they still pay nearly four times more than older drivers at £1,719.
Drivers in London and the North West of England face the highest annual bills at more than £1,000 a year – nearly double the £518 average in Scotland.
The rises in the past year mean that average motor insurance premiums have increased by 32.2% since October 2013.
John Blevins, Consumer Intelligence’s pricing expert said: “Prices are stabilising but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another Insurance Premium Tax rise in the Budget.
“Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars which cost more to repair, but also because the weakness of the pound means the cost of parts is rising.”
Consumer Intelligence also said that younger drivers were benefiting from telematics bringing average costs down. 65% of the most competitive prices for under-25s came from telematics policies, and one in five of all best buy quotes. As a result, prices for younger drivers are still slightly lower than in 2013.