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Premium Drivers index

Every quarter, comparethemarket.com releases research into the latest savings index for car insurance premiums by comparing our ‘cheapest’ and ‘average’ motor premiums across all age groups and determining something we call ‘the savings variable’. The findings can help to give you an idea of how much it would pay to shop around for your car insurance, instead of simply auto-renewing with your current provider. In general, the higher the savings variable is, the more you could stand to save by doing your homework and comparing prices.

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Car Insurance Savings variable

The past few years have proved to be an expensive time for UK drivers. Car insurance premiums have climbed steadily and our latest report suggests that, unfortunately, this trend is likely to continue. The cheapest premiums in the market have risen in price, but the average premiums have done so even faster, which suggests that competition between insurance providers may be low, potentially driving up the cost of insurance.

Today, the average quarterly premium across all age groups stands at £734, up £173 from the same period five years ago. On an annual comparison, the average premium during 2017 was £729, compared to £580 during 2015, a rise of £153 or 26% - the highest recorded level since we started compiling the Premium Drivers index back in September 2012.

The savings variable has narrowed to 16.74% between December 2017 and February 2018 – the smallest difference between cheapest and average premiums since 2015. Although remaining relatively flat over the past twelve months, since February 2017, the gap between cheapest and average premiums was at its highest in April at 17.47% before falling by 1.14% to its lowest level of 16.33% in February 2018.

However, despite some downward pressure on prices, motorists are now still facing far higher motor insurance premiums when they come to renew their policies than they were a few years ago, especially if they fail to shop around.

Car insurance prices, premium drivers index

Car insurance prices, premium drivers index

What’s behind the price rises?

According to our research, changes to the personal injury discount rate (known as Ogden Rate), which came into force in March, continue to impact on premiums.

Successive hikes to Insurance Premium Tax (IPT) to its current rate of 12%, in addition to the suggested change to the Ogden Discount Rate a year ago, both put significant upward pressure, as insurers were forced to pass on these additional costs to their customers.

When the change to the rate was made in February last year, we estimated that premiums would increase by £60 – something borne out over time and an additional cost which few can afford.

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Simon McCulloch

Director

comparethemarket.com

“The difference between the cheapest and average motor insurance policies available on the market has narrowed slightly since December. However, the seasonal nature of insurance means that this reduction might be something of a false positive. The saving variable has fallen consistently every quarter for about a year, which may seem like welcome news for drivers, but the fact remains that premiums are still at all-time highs. So whatever is happening to the savings variable, those motorists who auto-renew their policies will likely be paying over the odds for insurance to the tune of over a hundred pounds.”

Comparing after you claim

Our latest research also reveals that almost half (44%) of drivers who made a claim saw their insurance premiums increase at the time of renewal, and switched as a result. In fact, over a quarter (29%) of drivers said that they switched provider soon after having made a claim.

The combination of price hikes and poor customer service during the claims process is leading to a wave of switching. The majority (64%) of claimants who switched after a claim felt that better value was available on the market and almost half (44%) were not prepared to pay the significantly increased premium following their claim at the time of renewal.

Despite the fact that, according to consumer opinions, only 32% of claims involved a driver who is at fault, a quarter (24%) of claimants did not feel that their account of the incident was believed by their claims handler.

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Past reports

We carry out this research every quarter to find out what the current landscape means to you when it comes to buying your car insurance. Here you can see our previous reports to see how the industry has changed over the past year and what this means for your car insurance premium.

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