Car insurance Updated:
Average car insurance premiums have experienced another sharp rise in the last three months, figures from the AA have revealed, and unfortunately for motorists, it doesn't look as though things are going to improve any time soon…
The figures, taken from the AA's benchmark British Insurance Premium Index, show that the Shoparound quote (an average of the five cheapest quotes identified) jumped by 4.8% in the three months to 30 September, now standing at £569, which marks an increase of nearly £26 on the average premium. It's also the second consecutive quarterly increase so far this year, and means that a typical car insurance quote is now 9.2% – or £48 – higher than it was a year ago.
Perhaps surprisingly, it's older drivers – those aged 70+ – who have borne the brunt of prise increases this quarter, with more than 8% being added to the typical Shoparound quote for this age group. Over the year, they've seen their premiums rise by over a fifth, but conversely, younger drivers have seen their premiums rise by just 4% over the same period.
This upward trend is something that the AA had predicted, and unfortunately, it's a sharp turnaround from what many people had been getting used to. The present upward trend follows two years of falling premiums, largely the result of an expected fall in personal injury and whiplash claims, but it seems that those days have come to an end – not only has legislation failed to stop fraudulent claims, but the upcoming insurance premium tax (IPT) hike is having a significant impact.
"Fraud continues to be a major issue troubling the industry," said Janet Connor, managing director of AA Insurance. "Although huge progress in fraud detection has been made, too many people still consider it acceptable to make injury claims even if none were suffered, often encouraged by claim firms.
"It's a crime that has a £835m price tag, [and one] that's borne by drivers who are paying premiums estimated to be £50 higher than they should be as a result."
Then there's the rise in IPT, due to come into force on 1 November. The tax will rise from 6% to 9.5% and will add around £20 to the cost of a traditional policy, and will no doubt lead to a further rise in average costs in the months to come.
It could have more far-ranging consequences, too, as Janet Connor points out: "It's those who pay the highest premiums, particularly young drivers who can least afford the increase, who will bear the brunt of this stealth tax," she said, also arguing that the tax rise could lead to more insurance fraud attempts, with people falsifying information (such as their driving experience and even their name and address) in order to achieve a lower quote by another means.
Unfortunately, it doesn't look as though things are going to improve in the near term, with AA Insurance predicting that premiums will continue to rise into 2016, and that by the end of the year, they will have risen by 15%. But, you don't have to falsify information in order to get a cheaper quote – there may only be one way that insurance prices are going, but you can still secure the best quote available by shopping around to see what's out there. Check out our car insurance comparison tool to get started.
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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