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Car insurance premiums hit record high

Car insurance premiums hit record high

Category: Car insurance

Updated: 03/02/2017
First Published: 03/02/2017

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Car insurance price rises are showing no signs of stopping, as latest figures show that average premiums have recently hit another level, and are now the highest ever recorded.

That's according to figures from the Association of British Insurers (ABI), which show that not only did car insurance premiums hit a record high in the final three months of 2016, but they rose at more than five times the rate of inflation across the year, as several factors combined to push premiums to new heights.

The ABI's Motor Premium Tracker – which measures the prices consumers actually pay for their cover, rather than quotes – shows that in the final three months of 2016, the average price paid for comprehensive car insurance was a new record of £462, easily beating the previous high of £443 recorded in 2012.

This marks an increase of 4.9% on the previous three-month period, adding an extra £22 to the average premium in just a few short months, which in itself is the second highest quarterly increase recorded. Overall, the average premium across the whole of 2016 is now 9.3% higher than that recorded in 2015, a significant jump.

So just what's driving these continued price rises? Well, tax increases and the costs of whiplash-style injury claims are thought to be the primary influences putting pressure on premiums, but so, too, is the rising cost of repairing modern cars.

The rate of Insurance Premium Tax (IPT) has already risen twice since November 2015, and it's set to rise again this June, when it will stand at 12% – which means it will have doubled in little more than 18 months. This is undoubtedly adding to the cost of premiums, and with another increase to come, they're unfortunately set to rise even more.

Then there's personal injury claims. ABI figures show that the average bodily injury claim settled between July and September last year stood at £10,674, a rise of 2.3% year-on-year, and with fraudulent whiplash claims still being an issue, insurance premiums are bearing the brunt of it.

However, it's rising repair costs which are exerting ever greater pressure, with the average repair bill having risen by nearly 32% in the last three years to £1,678. Much of this is due to increasingly complex vehicle technology, says the ABI, but also the rising cost of spare parts due to currency fluctuations, and again, these pressures aren't expected to ease any time soon.

"These continue to be tough times for honest motorists," said Rob Cummings of the ABI. "They are bearing the brunt of a cocktail of rising costs associated with increasing whiplash style claims, rising repair bills and a higher rate of Insurance Premium Tax," and there's unfortunately no light on the horizon.

That's why it's so important to be proactive and get the best deal you possibly can for your car insurance. Don't renew your policy without seeing what else is out there – compare the options using our car insurance search tool, and you'll hopefully be able to keep any increase to a minimum.

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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