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Car insurance premiums drop by record levels

Car insurance premiums drop by record levels

Category: Car insurance

Updated: 23/10/2013
First Published: 23/10/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Car insurance premiums are falling by record amounts, with the third quarter of 2013 reflecting the biggest annual drop in premiums since records began in 1994.

According to the latest AA British Insurance Premium Index, a quarterly benchmark study of insurance premiums in the UK, the average quote for an annual fully comp car insurance policy fell by 12.4% in the 12 months to 30 September – representing an average drop of £568.32.

This dramatic plunge in rates is welcome news for the consumer and marks a significant change from historic trends, with premiums having been on an upward trajectory for years. In fact, just two years ago premiums increased by more than 40%, with bogus whiplash claims and insurance fraud being the main drivers behind the rise.

Thankfully, the recent crackdown on whiplash claims has had the desired effect and has led to dramatic reductions in premiums, whilst increased competition in the insurance market has added to the fall in rates.

Further reforms and new measures in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, due to be introduced next year, will further help drive costs down, as insurers won't have to put so much aside to deal with unjustified compensation claims.

Simon Douglas, director of AA Insurance, commented:

"The insurance industry is working hard with enforcement agencies to bring those attempting to make fraudulent injury claims to book.

"Honest motorists have been putting up with their premiums being affected by false or exaggerated injury claims for far too long.

"There has been a lot of talking and investigation into the car insurance market. Now premiums are reflecting anticipated law changes … these measures to contain the cost of claims are welcomed as ultimately that is what drives premiums."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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