Motor premiums fall as competition intensifies

Car insurance premiums have gone into reverse with drivers seeing price cuts of 5.5% in the past 12 months, according to new analysis from Consumer Intelligence. 

Its data shows average premiums have dropped to £712 with the price cuts accelerating since bills hit a record high September last year and have fallen for eight straight months as insurers compete for business.

Under-25s are the biggest winners with bills falling by 11.9% as they benefit from the continuing growth of telematics.

Around 61% of the most competitive policies for under-25s are now offered by telematics providers. However younger drivers pay an average £1,635 a year compared with £413 for over-50s and £629 for motorists aged between 25 and 49.

All parts of the country are seeing premiums drop although the decrease in Scotland was marginal at 0.1%. However, Scots pay the lowest average premiums of £522 which is nearly half the annual bill of £1,024 in London.

But average car insurance bills are still 21.9% higher than in October 2013 when Consumer Intelligence – whose figures are used to calculate official inflation statistics - first started collecting the data.

John Blevins, Consumer Intelligence pricing expert said: “Insurers are now free to compete on price without Insurance Premium Tax increases or changes to the Ogden rate which sets compensation for major personal injury claims.

“That is very welcome and should provide some relief for drivers when other motoring costs such as petrol prices are on the rise.

“The downward trend should continue with the increasing adoption of telematics helping to maintain the momentum. It’s interesting that around 23% of all the most competitive quotes are now from telematics providers.