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the latest car insurance prices

British Insurance Premiums Index shows rising cost of premiums in the UK

Insurance premiums have continued to rise over the last year with an average increase of 11.7% percent, around £66 extra – but what’s actually caused the change?

IPT or
Insurance Premium Tax, has risen to 10%. And likely to rise to 12% by June 2017. According to Michael Lloyd, director of insurance at the AA, there are a few reasons why this has happened:

  • Shopping around for a new policy each year means insurers have less reason to offer attractive introductory rates. If customers don’t stick around, there’s no reason for them to lower their profits in the short term.
  • False whiplash claims cost insurance companies around £1.3 billion a year. This adds around £40 to the average premium.
  • Accidental damage claims have caused the average car insurance quote to increase by around £25.
  • Uninsured drivers are on the rise, partly because of rising IPT. This affects young drivers most who pay the highest premiums, and are most likely to drive without cover.

The British Insurance Premium Index (BIPI) has been recording the movement of car and home insurance premiums, every three months, since 1994. It looks at the five cheapest quotes from around eighty insurers, for different types of customer. These figures come from brokers, direct insurers and price comparison sites – and generates something called the shoparound premium, which is an average of the five cheapest insurance prices for each customer.

2016 Q3 2016 Q4 Change 2015 Q4 Change
Comprehensive £598.37 £633.06 +5.8% £566.71 +11.7%
Third party, fire & theft £863.51 £940.56 +8.9% £787.64 +19.4%
Young drivers still paying higher prices

The cost of premiums for younger people is a lot more than for any other age group, with the average price for 17 to 22 year olds being £1,436 for a comprehensive policy. An increase of 5.7% over the last three months of 2016. The shoparound premium shows that prices for 50 to 59 year olds rose by 8.1% to £452.54. Drivers between 60 and 69 had the smallest average premium increase – just 2.6%, to £462.32 – and paid the lowest quote for their cover.  While the over 70s face increases of 4.4% on their insurance premiums because they’re more likely to be injured in a crash.

Scotland cheapest for car insurance

Some regions were also hit harder than others. The cheapest area for car insurance remains Scotland, with a shoparound premium of £458.75, even after an increase of 5.5%. And drivers in Northern Ireland saw a reduction of about 3%, taking the average cost of cover down to £794.87, but this still makes it the third most expensive area in the UK to insure a car. Those in the north-west saw prices rise to £887.35, keeping its position as the most expensive region on the mainland, followed by Londoners who have an average cost of just over £800 for their car insurance but who experienced the sharpest rise at 8.6%. 

Job impacts the gender gap

Although male and female drivers should be quoted the same premium if all other elements of the quote are identical (car, mileage, occupation, address, driving record), men nevertheless can expect to be quoted a higher shoparound premium than women. For example, young men paid just over £365 more than young women, as men tend to drive higher mileages and choose more powerful cars.

Occupation also has an influence. For example, midwives (who are mainly women) tend to attract lower premiums because they have fewer accidents as an occupation than, say, scaffolders who are mainly men.

Technology keeps the cost down

It’s clear to see from the BIPI that costs are rising but with insurers pushing up their prices and increases in tax, is there anything drivers can do to lower their premiums?

Recent technology has affected insurance prices, cars fitted with autonomous emergency braking (AEB ) are actually given a lower insurance rating as they reduce the risk of rear end collisions. It’s not only found in high-tech cars either, many cars now fit AEB as standard.

Another piece of technology, which has been around for a while longer is a black box, also known as telematics’. While some insurers will discount your premium just for installing a black box, these essentially track your driving behaviour and reward you for being careful. They have even been used to help disprove fake claims.

With the rising costs of insurance, it’s also worth thinking about your no claims bonus, and any other discounts you can get from your insurer. Find out more on car insurance and to see the different levels of cover we provide.

Source: AA British Insurance Premium Index (2016 quarter 4). 

Car insurance for £165 or less

That's what 10% of our new customers pay*

* Survey of new business sales from TheAA.com, Mar 2017 to May 2017. Prices based on comprehensive cover only.