Drivers are facing accelerating increases in car insurance taking average premiums to £666 as Government compensation rules come into effect, new research from insurance research experts Consumer Intelligence shows.
Average car insurance bills have increased by 15.7% in the past year – more than five times inflation – with nearly half the rise happening in the three months to May.
Action by regulators to cut the discount rate governing payouts in major personal injury claims to minus 0.75% from 2.5% effective from March 20th is driving the rise in bills. June’s Insurance Premium Tax rise will further add to the pressure.
Average motor insurance premiums have increased by 34.6% since October 2013, Consumer Intelligence, whose data is used by the Government’s Office for National Statistics to calculate official inflation statistics, estimates.
Drivers aged between 21 and 24 pay the highest prices at £1,202 but have seen slightly lower annual premium increases at 13.1%. Over-50s motorists are experiencing the biggest rises at 17.9% but pay premiums of £418.
Motorists in London pay the highest average premiums of £1,000 across the country – more than double the £474 bill in Scotland and the South West – and are seeing average increases of 16.7% as claim costs grow.
John Blevins, Consumer Intelligence pricing expert said: “Price rises had been levelling off at the end of last year but are now rising rapidly as the full impact of the discount rate cut comes into effect.
“Government plans to review the Ogden rate have so far taken a backseat following the Election although there is some relief from plans to push ahead with whiplash reforms announced in the Queen’s Speech.
“However with the impact of the latest Insurance Premium Tax rise still to come into effect drivers need to shop around to limit increases in premiums”
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