Boost for drivers as car insurance premiums fall
The cost of car insurance has fallen by its biggest ever amount in the last year, according to the latest survey of premiums by the AA.
The average quote for annual comprehensive car insurance fell from £659.53 to £594.86 between July 2012 and July 2013 – a drop of 9.8%. Third party, fire and theft insurance fell by 4.8% to an average £820.58.
AA Insurance said this was biggest fall in premiums since it introduced the AA Insurance Index in 1994.
On a quarterly basis, car insurance premiums fell by 3% for comprehensive cover and 2.2% for third party, fire and theft.
Premiums fell for all age ranges but the largest fall was experienced by drivers aged between 23 and 29, with premiums dropping by 12.8% (to £738.93) in the last year. The smallest fall was among drivers aged over 70 at 3.9% (to £407.70).
Nevertheless, those aged 17 to 22 were still quoted the most expensive insurance at £1,210 a year, while those aged between 60 and 69 faced the cheapest annual quotes at £342.73.
Simon Douglas, insurance director at AA, said: "It will be welcome news for hard-pressed motorists facing sharp fuel price increases. Insurers were facing a fast-widening gap between premium income and claims costs, largely driven by whiplash injury claims and fraud which saw very sharp premium increases between 2009 and 2011.
"That gap is closing and premiums are falling again thanks to competition, as well as improved fraud detection by the insurance industry and tightening of the law that is beginning to curb the number of spurious new whiplash injury claims."
On 26 July, the Association of British Insurers (ABI) said the value of fraudulent insurance has topped £1 billion for the first time, with the industry saying there will be "no let-up" in its fight against phony claims.
The number of fake claims reached 124,292 last year – 2,390 a week – costing insurance companies a total of £1.1 billion, the ABI said. It is thought that insurance fraud adds £50 to £90 a year to consumers' insurance premiums.
However, Douglas added that the motor insurance industry still faces many challenges: for example bringing down the high frequency and cost of crashes involving young drivers and uninsured driving.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.