AA figures reveal premiums dropped by more than 12% over the past 12 months
Motor insurance premiums have continued to fall, with the average premium dropping by 12.4% over the 12 months to the end of September.
The AA Shoparound Index update for Q3 2013 revealed the average UK motor premium was £568.32 as at 30 September.
AA Insurance director Simon Douglas said these welcome reductions were a result of insurers cutting rates in anticipation of benefits from the motor reforms.
“These drops are dramatic and many insurers are reducing rates based on anticipated savings from new measures in the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo) 2012,” he said.
However, Douglas added that the benefits were not yet filtering through to claims volumes: “While there have been some reductions in the size of claims there is little evidence yet of a fall in the number of personal injury claims.”
Justice Minister Chris Grayling announced today that independent medical panels were set to be used to assess whiplash claims and Douglas said that these reforms would help make the recent cut in rates sustainable over the long term.
“Without these further reforms to deal with excessive whiplash claims, the reductions we’ve seen can’t be justified by changes in the cost of claims,” Douglas said. “While competition may continue to force rates down for a while, without further reforms there would be a risk that there will be another sudden reversal once insurer losses start to bite.
“So, these measures to contain the cost of claims are to be welcomed as ultimately that is what drives premiums.”
The AA Shoparound Index also revealed that drivers aged between 23 and 40 were benefitting most from the recent price reductions in the motor insurance market.
Those aged 23–29 saw their premiums drop by more than 15% compared with Q3 2012, while 30–39 year olds were the second biggest beneficiaries with premiums dropping more than 13% (see table below).
|Age||Annual Change (%)||Average Premium (£)|
The AA said that young female drivers were likely to experience premium increases as a result of the Gender Directive that came into force in December 2012, while young male drivers were benefitting from large premium reductions off the back of the new legislation.