Car Insurance War coming to an End
The car insurance price war is probably the longest of its kind, but experts forecast that its nearing an end with driver’s facing the biggest rise in premiums in almost four years. The last three months of 2014 witnessed comprehensive motor insurance costs rise by almost two percent according to reports compiled by comparison site Confused.com and consultancy Towers Watson. This led to a smaller increase in the third quarter, which was the end of cheaper car insurance.
These staggering insurance premium costs are a concern for driver’s as well as government ministers especially in light that new reforms were introduced to curb insurance costs. These included a crackdown on fraudulent claims for whiplash injuries, compensation culture and even went as far as reducing fees lawyers earned from handling such cases. UK head of property and casualty insurance pricing at Towers Watson Stephen Jones claims that a boost in insurance premiums indicated that insurance companies were rather responding to lack of definitive solutions to the issue of fraudulent whiplash claims.
Young drivers in particular were faced with the highest premium increases, more than 4.5 percent for 18 year olds, which translates to more than double the national average in the last quarter of 2014. But motorists taking advantage of the plunging fuel prices to visit their families, friends or simply driving more have inadvertently contributed to the rise in insurance costs. This is simply because more driving, and more motorists on the road results in more accidents, which makes sense for the most part. In terms of numbers, the total numbers of miles driven on UK roads rose by nearly 2% in 2014 because petrol prices had plunged by almost a fifth since the summer or £1.10, down from £1.33.
With the use of vehicles increasing due to falling fuel prices and other reasons, insurance companies can logically anticipate more accidents therefore increase insurance premiums to cater to the increased risks. According to the Department of Transport, the end of 2014 rang in around half a million more registered vehicles or 1.8 percent more than a year earlier. And according to reports from the Society of Motor Manufacturer’s, this rise in vehicle registrations was partly due to 2.48 million new cars sold in 2004, the highest in a calendar year since 2014.
In total, driver’s clocked an upwards of 75 billion miles in just three months leading up to September 2014, which was more than a 2% increase from the same time in 2013. The dramatic drop in fuel prices is now seeping through to the forecourts, which will also affect trade insurance for car dealers where prices at some pumps were as low as a £1 per litre. Despite the increase in insurance premiums in the fourth quarter of 2014, the average premium still managed to drop by 8% or £51 to £594. But drivers of luxury and sports car did especially well last year by generally enjoying an overall insurance premium cut of approximately 10%.
Contact us here The Insurance Factory for a quote to see if we can make your car insurance cheaper for you