Insurance Premium Tax rise blamed as over-50s see biggest increase, while telematics keeps lid on younger drivers’ costs
Car insurance premiums have increased 13% in the year to February, to an average best buy annual rate of £683, data from Consumer Intelligence shows.
Its Motor Insurance Index – used by the Office for National Statistics as part of official inflation data – shows price rises have accelerated in the past six months partly driven by the government’s November increase in Insurance Premium Tax to 9.5% from 6%.
There is speculation that Chancellor of the Exchequer George Osborne will raise IPT again, to 12.5% in Wednesday’s Budget.
Drivers aged over 50 have seen the biggest rises – up 15.3% on average – taking average premiums to £298, while under-25s have seen prices rise 9.3%.
Increasing use of telematics is keeping a lid on premiums for younger drivers, but the average best buy premium for under-25s is static at £1,600 a year; though that is about 15% lower than in October 2013 when Consumer Intelligence began monitoring prices.
Consumer Intelligence found that 48% of the best deals for under-25s are from insurers offering telematics policies, compared with 33% in October 2013.
Average premiums for drivers aged between 25 and 49 rose by 13.7% in the year to February to £530 and have increased by 7.3% in the past six months.
“Average motor insurance premiums are heading upwards at a rapid rate with the Insurance Premium Tax a major factor,” said Consumer Intelligence chief executive Ian Hughes.
“Under-25s who pay the highest average premiums at £1,600 need to seriously look at black box technology as a way of limiting price rises, but can take some comfort from the fact that prices are still lower than they have been.”