Rather than increasing competitiveness pushing the cost of car insurance down, close analysis shows that the opposite may be true.
A closer look at the most recent AA British Insurance Premium Index showed that the average cost of a comprehensive policy had risen by £12.50 bringing it up to £568 for an annual policy. The average cost of five of the cheapest quotes from comparison websites showed were up by nearly £84.
It seems this increase is down to the reluctance insurers have in offering cheap introductory offers at a loss, as they’re now well aware that most people will shop around come their renewal for a cheaper deal when the policy levels out to its normal rate.
AA director of insurance Michael Lloyd shed some light on one of the reasons for this upward trajectory,
“As more people look for introductory offers there is less incentive for companies to offer loss-making prices to attract new business that will, a year later, go elsewhere. So I believe this is one driver of recent premium increases while insurers are looking for ways to better reward customer loyalty.”
The Insurance Premium Tax (IPT) which rose by 67% between January to March 2016 has also been blamed for pricier premiums. This pushed up the overall cost of insurance premiums up by 15%, the highest ever recorded according to the British Insurance Brokers’ Association (BIBA) and the Acturis Insurance Price Index.
Add to these factors the claims for whiplash which are still “unacceptably high” and the instance of uninsured drivers and you have a trend which shows no signs of back tracking,
“Premiums have not risen by as much over the second quarter as some commentators predicted although it’s still an upward trend that I expect to continue over the rest of the year,” Lloyd said.
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