Car insurance premiums falling

26 July 2018
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There’s a rare bit of good news for motorists as insurance premiums are falling, fuelled by anticipated legislation to help combat false whiplash claims and cut insurance payouts.

The AA’s latest insurance index for the three months until 30 June 2018 reveals that drivers enjoyed an £18 cut in the average quoted premium for comprehensive insurance. Over 12 months, premiums dropped by 10.8% from £726.93 on average between March and June 2017 to £648.10 in the same period this year – a drop of £78.83.

Janet Connor, insurance director at the AA, says: “Although not everyone will see premium falls of this size, it is certainly welcome news for many drivers. Premiums had been steadily driven upwards by the fast-growing whiplash claims epidemic, fuelled by unscrupulous cold-call law firms, as well as higher car repair costs.

“Last year, the government said it was pushing through reforms to the claims culture with the Civil Liabilities Bill, as well as a review of the much-misunderstood ‘discount rate’ on payments made for serious injury that is likely to cut insurance payouts for serious injury claims. That has triggered a fall in premiums in the expectation that claims costs would fall.”

Moneywise reported in September 2017 that the government had reversed a change to the so-called ‘Ogden rate’, which is used to calculate compensation for serious accident claims. The rate was originally set at 2.5% but changed to -0.75%, which added £60 on average to motorists’ insurance bills last year. This was because insurers were forced to pay out higher amounts to accident claimants. A new Ogden rate has yet to be set, but the government said in September 2017 that “based on currently available information” if the new system were to be applied today, the rate “might” be in the region of 0% to 1%.

Commenting on the anticipated Civil Liabilities Bill relating to whiplash claims, justice secretary David Gauke adds: “Our reforms will ensure fairness for both motorists and claimants, and will see insurers pass down savings to their customers.

“Hard-pressed motorists will welcome this fall, for the second quarter running, leaving them with more cash in their pockets.”


 

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In reply to by anonymous_stub (not verified)

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