Car Insurance Prices - Premium Drivers Index |

Premium Drivers index

Premium Drivers index

Each quarter, Compare the Market publishes research on the latest savings for car insurance premiums by comparing our ‘cheapest’ and ‘average’ motor premiums across all age groups to determine something we call the ‘savings variable’. The results 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 save by comparing prices.

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Car Insurance Savings variable

The past few years have proved to be an expensive time for UK drivers. However, our latest report suggests that insurance premiums saw a slight drop in the second quarter of 2018. We’ve seen that prices failed to rebound as much as they typically would following a seasonal reduction at the start of the year.

Today, the average quarterly premium – blended across all age groups – stands at £727, which is still an increase of £140 over a three-year period. On an annual comparison, average premiums have risen £200 since records began in September 2012, when they stood at £559.

The savings variable has narrowed to 16.7% between March 2018 and May 2018 – the smallest difference between cheapest and average premiums in three years. This is the second consecutive quarter of reductions in the percentage difference between the cheapest and the average policy on the market, down from 16.74% in March 2018 and from 17.01% in December 2017.

But given that the cost of insurance spiked by £52 in May alone (to its current level of £766), 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 fluctuation?

According to our research, changes to the personal injury discount rate (known as Ogden Rate), which came into force in spring, 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.

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Dan Hutson

Head of Motor

Compare the Market

“Overall, the past quarter has been a tale of two premiums. The cost of insurance for motorists stayed unusually low for March and April following the usual seasonal drop at the start of the year. However, May saw a marked change with premiums jumping by over £50 in a return to the levels that are generally expected at this time of year. More broadly, the trend line for insurance premiums has remained to be upward facing following a torrid two years for drivers facing regular hikes on the back of government policy changes.”

Are British drivers set to snub diesel cars?

Our latest research also indicated that new diesel car taxes are set to deal a serious blow to sales of diesel cars.

In our survey of 2,000 current diesel drivers, nearly half of respondents (48%) said they were less inclined to purchase a diesel car in the future due to the Vehicle Excise Duty, which is impacting purchasers of diesel cars registered after 1 April 2018 that do not meet the real driving emissions standard. A further 42% were concerned about the current value of their diesel vehicle.

This concern is starting to be felt across the market, with the latest Society of Motor Manufacturers and Traders (SMMT) data showing that diesel car sales fell by 28.2% last month.

Encouragingly, people did recognise that change was coming, and nearly two thirds (63%) feel that the public will adapt to the changing market in order to lessen the country’s reliance on damaging fossil fuels.

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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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