After many months of continuous rise, the latest Car Insurance Price Index released by global consulting firm, Towers Watson and a car insurance comparison website show that car insurance costs are finally on the decline.
According to the Car Insurance Price Index, the decrease in premiums, which is happening for the first time in more than three years, means that over a 12 month period, the total rise in comprehensive premiums was 12.3%. This is a lot less than the 37.8% in 2010.
However, it also showed that the third party, fire and theft premiums had risen to 2% between July and September this year. Comprehensive policies have increased by an average of £92 to £843, while the third party, fire and theft premiums have increased to £1,155.
The director of Towers Watson, Peter Lee said, “As we stated in our recent annual Motor Insurance Industry Report, the pressure of reacting and adapting to escalating levels of bodily injury claims largely dictated why prices rose steeply. Whether the current state of insurer profitability justifies dropping prices just yet is something of an open question. Although the economic downturn has reduced claims as a result of people driving less, the proportion of accidents that result in bodily injury claims is still growing strongly. What is clear is that competition in the market is healthy.”
The current figures showed the premiums were moving in a positive direction for people under 35 in general, especially those who were between 17 and 20, as they saw a 3.9% decrease in price. Motorists in Manchester and Merseyside experienced a 2% increase in price while people living in the West of England witnessed a 4.9% drop. However, folks living in Gloucester had the biggest reason to celebrate, as they saw a 6.2% decrease.
Mr. Lee concluded by saying, “These differences are not indicative of unfair ‘postcode discrimination’ as has recently been claimed to justify proposals to limit geographic pricing for bodily injury claims risk. The reality of postcode pricing variations is that they reflect claims experience and factors such as urban density.”