Car insurance is on track to surpass the most expensive prices drivers have ever seen, as premiums soar by almost £100 in just four months.
Motorists’ average premiums have risen to £847, according to Confused.com’s Q2 2017 car insurance price index, powered by Willis Towers Watson – the car insurance price index in the UK based on more than six million quotes a quarter. Figures from the car savings site show this is just £11 short of the most expensive premiums on record, six years ago when the average cost was £858 (Q2 2011).
Prices have accelerated by 8% in the last quarter – the biggest quarterly increase in seven years (since Q3 2010) – equivalent to a hike of £66 from £781 at the start of the year (Q1 2017). The rate of the increase can largely be attributed to extra pressures recently imposed upon the industry, including the Ogden rate cut, which sees insurers potentially paying out more for personal injury claims, and an increase in Insurance Premium Tax (IPT) in June.
These pressures have also caused the cost of car insurance to rev up 18% annually, equivalent to a whopping £132 price rise since this time last year, which is the biggest annual monetary increase seen over a six-year period (since Q2 2011). And, as car insurance costs shift up a gear, it seems likely drivers will see the average premium pass the £1,000 mark by 2018.
However, it appears the latest car insurance price increases are leaving some drivers more out of pocket than others. Even though the rules prohibit insurers from assessing a driver’s risk based on their gender, there are other risk factors at play which lead men to have poorer claims experience than women, and this is reflected in the price of their premiums.
As a result, the gap between what men and women pay for their car insurance has widened even further, with a £120 difference in price. This is just £1 short of the pre-EU gender directive gap in (Q4 2011, £121). However, this is linked to the fact that men tend to drive more expensive cars with larger engines, on average, so they make higher value claims. They also have significantly more convictions than women.
Both male and female motorists have felt the wrath of sharp quarterly increases, of +9% (£77) and +7% (£53) respectively. Men have now broken the £900 barrier (£901) and are just £7 off paying their highest ever premiums (£908, Q2 2011). Women are paying £781 on average and just £14 less than the most expensive car insurance they have ever paid (£795, Q2 2011).
