AA reports fall in cost of car insurance

| October 23, 2012 | 0 Comments
AA reports fall in cost of car insurance

The cost of car insurance premiums fell in the third quarter according to the AA British Insurance Premium Index, after rising steadily for several years and flattening out in early 2012.

The cost of policies purchased directly from an insurance firm fell by 2.9 per cent in the third quarter but was still nearly 6 per cent more expensive than a year ago

However, the cost of policies purchased from price comparison sites has fallen slightly.

The cheapest comprehensive policies purchased directly from an insurance firm fell by 2.9 per cent to £870 a year in the third quarter.

Increased competition is causing the downward trend in prices for consumers, even though costs for the insurance industry continue to rise.

Simon Douglas, director of AA Insurance said: “Competition is tough in the insurance market, forcing many companies to reduce premiums despite the fact that costs show little sign of abating.

“Nevertheless, some are still increasing premiums.”

Across the UK, the average car insurance premium now costs £844 but in Scotland, which is the cheapest place in the UK to buy car insurance, the average premium in just £438.

In contrast, the average price of a premium in Greater Manchester and Liverpool is a hefty £1,059.

The north west of England is known as a ‘hot spot’ for fraudulent whiplash claims, a major contributory factor to the rise in costs for insurers in recent years.

The government is to investigate ways of reducing the number of whiplash claims which come to court.

Proposals include assessment of whiplash injuries by an independent medical panel and increasing the small claims limit for personal injury cases from £1,000 to £5,000 to allow the county courts to deal with more of the claims.

A survey by comparison website MoneySupermarket.com , at the end of September, also revealed a fall in car insurance premiums due to tougher competition.

The price comparison site found that the cost of car insurance premiums has fallen by 10.6 per cent.

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