Premium Insurance Costs for Motorists

Posted by Tom Magor in Personal Finance on 10 October 2016 - Tom is a Senior Credit Analyst at checkmyfile.

While price comparison services have provided drivers with the opportunity to continually monitor their insurance costs, it has been claimed that the average premium price is expected to continue to rise.

A study carried out by Comparethemarket.com predicts that average insurance costs will exceed £700 in the coming months, with increasing costs for insurance companies being the driving force behind the increase. In particular, the cost of insurance fraud is likely to be passed onto consumers.

There are also concerns that a record gap between the average and cheapest deals on the market may represent a fall in competition. The gap, also known as the savings variable, widened to £118 between June and August 2016 with the average annual premium standing at £697.

Based on current trends, it’s predicted that premiums for drivers who automatically renew their insurance policies with their existing providers will reach £739 before the end of 2016. However, there is still considerable value in shopping around with savings of up to £130 achievable for those who seek out the best deals. Despite this, the cost of even the cheapest deals have increased by nearly £70 over the last year.

A statement from the report says, “A rise in incidents such as staged car crashes, rising repair bills and insurance scams are just some of the reasons why premiums have risen as insurers look for ways to absorb increased costs."

An increased rate of Insurance Premium Tax introduced in the last year has also contributed to the increased prices.

Dan Bass of Comparethemarket.com has said that it’s clear that insurers are not feeling any competitive pressure to reduce their prices. Despite this, the Competition and Markets Authority (CMA) has been unable to confirm whether they have received any complaints regarding the insurance sector. However, the price comparison website industry itself is currently being investigated by the CMA.

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