Car insurance premiums falling at record rate

Car insurance premiums falling at record rate

Looking at recent figures released by the AA's Insurance Premium Index, we see that the cost of car insurance has been falling at a record rate, with premiums dropping by almost £90 in the last twelve months.

According to the AA's numbers, the average price of a fully comprehensive car insurance premium dropped by nearly 15% in 2013, with a 4.6% drop in the past 3 months alone. This fall is thought to be as a result of the crackdown by the authorities and insurance companies on the many fraudulent whiplash claims that have plagued the market in recent times.

When averaging out the top five cheapest premiums available both direct from insurance brokers and from price comparison websites, we can see a price drop of £62 between January and October 2013 (from averages of £621 to £559), and a drop to an average of £533 this month. The annual drop in price of car insurance premiums is the largest ever seen since the AA started making it's price recordings back in 1994.

The director of AA Insurance, Simon Douglas, commented that the record drops in prices they are seeing are continuing despite the number of personal injury claims rising. Indeed, the price falls can be attributed to fierce competition in the insurance marketplace, and the future prospect of changes in the laws to help stem the tide of fraudulent whiplash claims.

However, Mr Douglas was also wary about the future of insurance costs, stating that "...my biggest fear is that the falls are too great, premiums will bounce sharply up again later in the year."

---

---