What is happening to the car insurance market?

Posted on July 26, 2012 by WebTeam

Some insurance companies are increasing premiums whist others are reducing them to try to increase the number of customers on their books.

Car insurance premiums are volatile at the momentDirectly sold comprehensive car insurance policies for the average five cheapest premiums increased by 8.5% to £1,034 per annum based on the AA British insurance premium index.

If you look at the same data over 12 months premiums dropped by 3.3% to £631 per annum. The study revealed that this followed a six-month period with little movement but young drivers have suffered most with recent increases.

In the second quarter of this year premiums for men in the 17 to 22 age bracket averaged £2,792 per annum but premiums for women in the same age bracket averaged £1,995 per annum.

Simon Douglas who is the director of AA Insurance, said: “Competitive pressure is leading some companies to make big premium cuts on price comparison sites so that they can increase their portfolio of customers. While this is great news for consumers, they need to make sure they’re getting good cover, not just a good price.”

Mr Douglas also commented that “significant inroads” to tackle fraudulent claims such as “crash for cash” were progressing but insurance companies are still receiving an “excessive” number of claims for whiplash resulting in premiums being increased.

The study also revealed that car insurance companies are targeting people who provide incorrect information on application forms to obtain lower premiums.

Mr Douglas stated: “We expect the industry eventually to have routine access to DVLA data and the sooner this happens the better. It will allow fraudulent applications to be weeded out. Insurance companies are already exchanging information about people who appear to be manipulating data in order to cut the price quoted.”

The cheapest region to purchase car insurance is in Scotland with £727 per annum being the average premium quoted. The most expensive regions are Liverpool and Greater Manchester with £1,648 per annum the average premium quoted.