Car insurance premium rises sting motorists in their 50s hardest

Published by Edmund Greaves on 11 July 2017.
Last updated on 11 July 2017

Car insurance premium rises sting motorists in their 50s hardest

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.”

 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 (%)
18-20 £973 -£24 -2.37% £4,625 13.65%
21-25 £676 £0 0.01% £3,273 11.00%
26-30 £521 £28 5.71% £2,958 9.72%
31-35 £450 £23 5.49% £2,635 9.42%
36-40 £413 £27 7.07% £2,556 9.09%
41-45 £373 £23 6.69% £2,400 8.85%
46-50 £354 £18 5.44% £2,320 8.26%
51-55 £339 £30 9.61% £2,316 7.69%
56-60 £311 £34 12.19% £2,187 7.29%
61-65 £283 £23 8.73% £2,161 7.06%
66-70 £260 £14 5.51% £2,200 6.71%
71-75 £276 £14 5.51% £2,399 6.67%
76-80 £320 £23 7.69% £2,824 7.18%
81-85 £398 £29 7.75% £3,367 7.34%
86-90 £476 £33 7.40% £3,420 7.99%
91+ £546 £32 6.25% £5,559 8.82%

Source: Association of British Insurers, July 2017.

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Excellent reporting...but don

Excellent reporting...but don't you have any right-hand drive car pictures?!

Thanks you for pointing that

Thanks you for pointing that out, it has been corrected!

Well,I an 68 and have just

Well,I an 68 and have just rebewed my FC car policy and it rose 34% from 2016.I renewed because,after 'doing' the rounds of the PC sites + Aviva/DL/Tesco,it was £30 cheaper than the best quote received.
I live in a VERY safe neighbourhood and drive less than 4000mpy.

And why is this 'fair'?

And why is this 'fair'? Drivers between 56-60 are no more 'at risk' of having an accident than anyone else!

Why worry.., soon cars will

Why worry.., soon cars will be driving themselves and accidents will be a thing of the past. No one will need insurance and exhaust emissions will be champagne.

I'm 67 and my insurance went

I'm 67 and my insurance went from £225 in 2016 to £305 this month, with my current provider. A whopping 35.5% increase. I couldn't get it any cheaper, despite searching for a week.

I fit the age group, my

I fit the age group, my premiums had a big hike too.., but I also bought a new car, my last car was 21 years old. Could it be that this age group are more likely to be able to afford new cars?