Car insurance costs fall
The cost of car insurance is starting to fall according to the AA’s British Insurance Premium Index.
The average ‘shoparound’ quote for comprehensive car insurance fell by 1.1 per cent to £1,132 by the end of March.
The Shoparound premium is an average of the five cheapest premiums quoted by around 50 insurance providers.
Over the year to March 2012 the Shoparound index increased by 7.7 per cent, representing the smallest annual increase for four years.
Last year the annual increase was a hefty 40.1 per cent.
However the AA expressed concern that the fall in insurance prices will not be sustained.
Simon Douglas, director of AA Insurance, said: “My fear is that if prices do continue to drop, we’ll see a repeat of 2009, when industry losses led to premiums suddenly rocketing up following a long period of little movement.”
The AA’s figures suggest that insurance providers are making early preparations for a change in the law that will make it illegal to use gender as a criterion for assessing risk.
The index showed a 4.8 per cent increase in the cost of policies for young female drivers, while premiums for male drivers under the age of 23 fell by around 1 per cent.
The European Court of Justice ruling on gender comes into effect in December.
In other insurance news, new research by Barclays suggests that 60 per cent of adults in the UK have not taken out life insurance.
With pressure increasing on household incomes and high unemployment it seems that life insurance is one area in which people are cutting back.
Britain is estimated to be facing a protection gap in the UK insurance market of £2.4 trillion.
Kieran Murphy, MD, Barclays Insurance said: “Life insurance and knowing your family are protected is really valuable and obtaining the right level of cover needn’t be too costly.
“We know that household budgets are really tight at the moment, but it’s important that protection needs don’t slip down the list of priorities.”