Motor premiums drop 8.4% year-on-year

cars

Data from Consumer Intelligence also suggested the FCA dual-pricing regulation would see the industry experience a hard market once more.

Car insurance premiums have plummeted 8.4% in the last 12 months, according to data analysis from Consumer Intelligence, which revealed that the average policy now costs £779 and the average motor premium is priced at £732.

The business detailed that the industry is witnessing a downward trend for premiums across the board, in all age and regional segments.

Causes
It added that there are several reasons for falling premiums, spanning from an uptick to telematics quotes to the FCA’s pricing rules being implemented at the end of the year.

Harriet Devonald, product manager at Consumer Intelligence, commented: “We are seeing a downward trend for premiums across the board – in all of our age and regional segments – and it’s not just the uptick in telematics quotes behind the plummeting premiums.

“With the FCA’s pricing remedies coming in at the end of the year, some brands are looking to gain volume while they can. Others, who benefited from a quiet year of motor claims in 2020, have been able to pass savings onto customers, whilst other brands are following the market downward in order to remain competitive.

Devonald added that it was unlikely this trajectory would continue in the second half of the year, and that once the new regulation took force, the industry would be likely to see a hardening market once more.

Telematics
The research also highlights an increase in telematics provision for the older demographic.

Consumer Intelligence explained that telematics offerings had traditionally been tailored for younger drivers, with 59% of the five cheapest quotes for drivers under the age of 25 coming from telematics firms.

However, the latest research demonstrated that 20% of the five cheapest quotes for drivers aged 25-49 now come from telematics firms. The business has confirmed that this was the highest figure recorded for this age demographic since the firm first started collecting data in October 2013.

Additionally, telematics also saw a boost for the over 50s, with telematics products now accounting for 8% of their top top five cheapest quotes.

Age
Data also observed differences within age groups, with drivers aged 25-49 seeing their premiums drop the most in the last three months, by 2,1%, the cost of car insurance for this age bracket averaging at £586.

Over 50s premiums also plummeted by 1.5% and under 25s witnessed a 1.1%. Policy holders under the age of 25 pay the most of their car insurance, the average totalling at £1,735, while those over 50 only pay £345 for an annual policy.

Consumer Intelligence suggested that another reason for the fall in premiums was that other insurers which have benefited from a quiet year of motor claims in 2020, have been able to pass savings onto customers and brands.

Regions
Data not only indicated age-driven differences in policy costs, but also regional discrepancies, with Scottish drivers being the only ones in the UK to see an increase of 1.5% in premiums in the last three months.

The business revealed that London holds the crown in terms of the most expensive policies, estimated at £1,456, while in the South West it only costs £517, making it the cheapest region for car insurance in the UK, followed by Scotland (£524) and East Midlands (£532).

Long-term
Since the firm has first started recording data in 2013, it said the average overall premiums have increased 14.5%, adding that although prices have now fallen by 18.2% when compared to the September 2017 pricing peak, they are now at levels observed in 2016.

Consumer Intelligence further noted that with the FCA’s pricing rules coming in at the end of the year, some brands are looking to gain volume while they can, while other brands are following the market downward in order to remain competitive.

However, the business said it was unlikely that the trajectory of falling premiums would continue as through the second half of the year, and that once the new FCA regulation took force, the industry would be likely to see a hardening market once more.

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