Motor premium surge by 4% in Q4 2019

Motor insurance premiums have increased by 4% or £32 in Q4 2019, according to the Willis Towers Watson and Confused.com Car Insurance Price Index, which is based on price data compiled from around six million quotes per quarter.

Premiums rose by 5% (£41) in 2019, as drivers now pay £815 on average, compared with £774 in Q4 2018.

UK lead of P/C personal lines pricing at Willis Towers Watson, Graham Wright said: “This is the fifth quarter in a row where prices have swung between increases and decreases, showing the market’s ongoing uncertainty around pricing.

“This uncertainty has been fuelled by many elements, including timing challenges with the Civil Liability Bill implementation,” he added. “That said, the increases have tended to outweigh the decreases and the recent challenging environment for 1/1 reinsurance renewals on motor excess-of-loss will have done nothing to help insurers keep costs under control.”

The study notes an increase over the last 12 months across all regions in the UK, with drivers in Inner London being hit with the biggest annual rise of 8% in their average premiums from £1169 to £1260. The smallest annual increase of 1% was seen in the Scottish Borders, increasing average annual premiums to £615, while the South West is now the cheapest region for motor insurance, which on average costs just £595.

Wright noted: “Many of the challenges observed throughout 2019 will persist in 2020, as cost pressures remain from expensive vehicle repairs, theft claims, last summer’s discount rate change, Brexit-related uncertainty and IPT increases.”

Head of data services at Confused.com, Steve Fletcher said: “We are seeing the biggest annual increase in motor insurance premiums in two years, and steepest quarterly rise since June 2017. And the scale of these increases shouldn’t be understated.

“The past 18 months have been very volatile, with prices fluctuating before delivering a powerful blow to end the year,” he explained. “And this is a pattern we have seen before, which resulted in premiums increasing a further £100, on average. If we see a repeat of this cycle, then we can anticipate prices to exceed £900 in the next 18 months and reach the highest on record. With the current economic uncertainty surrounding the UK, we shouldn’t hope to see an easing of insurance premiums in 2020.”

Female drivers aged between 26 and 30 saw the greatest annual rise, with a 9% increase taking their premiums from £755 to £823. Male drivers aged between 17 and 20 are still paying the most of any demographic, £2369 compared with £2230 last year, a 6% surge.

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