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Sharp fall in car insurance costs

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by Jan Harris

The average cost of comprehensive car insurance was £797 in spring 2012, a fall of more than 7 per cent, or £60, compared with a year ago.

The fall reverses a steady rise in the price of motor insurance premiums since 2009.

A survey by Confused.com and professional services company Towers Watson revealed that men are paying £110 more than woman, on average, but this is expected to change later this year.

A new European directive comes into force in December which will ban insurance firms from discriminating in their pricing of policies based on gender.

According to the Confused.com survey, motor insurance prices fell the most for drivers aged 71 or more, with a drop of 8.8 per cent.

This age group also pays the least for motor insurance, at an average of
£426 a year.

Young drivers are also benefiting from lower prices but those in the 17 to 20 age group still pay more than any other group with an average premium of £2,491.

There is a wide regional variation in prices for younger drivers, with those in Manchester and Merseyside facing an annual premium of £5,394, while those in central Scotland pay £2,999.

The fall in the price of premiums for young male drivers could reflect the increased use of telematics-based insurance policies which reward careful driving with lower costs.

Sales of this type of car insurance are expected to reach 500,000 in the next two years, according to the British Insurance Brokers’ Association.

Gareth Kloet, head of car insurance at Confused.com, said: “Competition between car insurance providers is currently very high.

“We anticipate that drivers will continue to reduce their annual mileage as a result of high motoring costs and seek cheaper vehicles in their search for more affordable cover.”

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News posted: July 16, 2012

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