Drivers in their 50s have been hit hardest by car insurance premium rises in the past two years, with prices now at record highs.
Research from the Association of British Insurers (ABI) has found that those aged between 56 and 60 have seen prices hiked by 12.19% on average since 2015, equating to an extra £34 on premiums. This takes annual policy prices to £311 on average.
Those aged between 50 and 55 meanwhile, have been hit by an average increase of 9.61% or £30, taking policy prices to £339 a year.
But to make matters worse, prices are set to rise further. The ABI’s figures pre-date a hike in Insurance Premium Tax (IPT), which rose from 6% to 12% on 1 June, effectively adding an extra 6% to the cost of every premium.
The government’s decision to slash the personal injury ‘Discount Rate’ – known as the Ogden rate - to -0.75% from 2.5% in March, is also set to have a major impact on motorists’ premiums. Accountancy firm PWC predicts premiums will rise on average between £50 and £75 as a result.
These changes are compounded by an economic outlook in which inflation is driving prices up at 2.9%, according to May’s data from the Office for National Statistics.
Matt Oliver, spokesperson for GoCompare Car Insurance, comments: “Motorists are being hit with rising costs from all sides at the moment and those who have renewed their policy in the last few months are very likely to have seen an increase in their premiums.
“IPT alone has doubled since November 2015, up from 6% to 12%, following the latest rise last month. Any charge that is levied as a percentage of car insurance premiums is likely to hit those who already face the highest premiums the hardest.”
‘Government action needed’
ABI director general, Huw Evans, has called upon the government to act to soften the blow to motorists. He says: “With inflation on the rise, motor premiums at a record high and the public purse under pressure, it’s concerning that the government has yet to commit to delivering a fairer system for setting the personal injury Discount Rate. We’re pleased the government is going to bring forward a Civil Liability Bill to reform whiplash style personal injury compensation, but the benefits could be wiped out if it doesn’t defuse the Discount Rate bombshell.
“At a time when politicians from all parties are calling for additional investment in public services, setting a Discount Rate that is fair for claimants, customers and taxpayers could contribute up to £1 billion a year to help fund this.”
- The little-known fund to help cyclists and pedestrians knocked down by uninsured and hit-and-run drivers
See the table below for motor insurance premium increases by age band.
|Age of Policyholder||Average Premium (£)||Annual premium increase (£)||Annual premium increase (%)||Average Claim (£)||Claims Frequency (%)|
Source: Association of British Insurers, July 2017.
Thanks you for pointing that out, it has been corrected!