New statistics contradict AA index showing falling rates
Budget Insurance Services is challenging new statistics on motor premium rates from the AA.
The statistics, part of the AA's British insurance premium index, show that motor premiums have risen by 1% over the past quarter. But Budget's figures, which are based on a pool of 10,000 risks, making it 20 times larger than the AA's index, show a 0.25% drop in motor premiums, confirming fears the cycle is heading down.
Budget head of insurance services Simon Jackson said: "We believe that by using 10,000 risks from over 110 insurers' products, we are very well placed to accurately reflect movements in the marketplace.
"We certainly plan to continue to monitor this monthly and report top line findings on a quarterly basis."
The Budget figures show a highly competitive market where insurers are fighting to get the best risks in order to keep claims costs down. There is evidence that some insurers are turning away 50% of inquiries, Budget said.
Jackson said: "Surprisingly it is some of the big name insurers who are doing the 'cherry-picking', not the customers.
"Many of these big names promote what appear to be competitive rates when, in fact, in a larger proportion of cases they are declining to quote, because the profile of the customer does not suit them."
But speaking at the launch of the upgraded AA British insurance premium index, managing director Andrew Briscoe had a conflicting message.
"We are predicting a slow rise in motor premiums," he said. "We hope this will be the start of sensible price rises by the industry." But Briscoe added: "We may be facing a deflationary motor market."
In the property market, the AA's figures showed premiums unchanged, continuing a 10-year trend.
But Briscoe said an increase was likely. "Very few insurers are making the returns they want," he said.
Budget's statistics do not include household insurance.