Prices up 31% over past 12 months, according to Confused.com/EMB index
The average cost of a comprehensive car insurance policy rose by 14.2% in the second quarter of 2010, according to the latest Confused.com/EMB car insurance price index. This outstrips the rises of 4.3% and 6.3% increases of the previous two quarters and is the equivalent of adding £74 to the average policy.
As a result, prices for comprehensive car cover have risen by 31% over the past 12 months, according to the index, adding £142 to the average policy and bringing the average comprehensive premium to £599.
The index found that 41-55 year old drivers bore the heaviest brunt of the quarterly increases for comprehensive cover, reflecting a generation of parents allowing their children onto their policy. Women suffered the worst from this with drivers of this age group facing a 14% penalty for having named drivers other than their husband.
“This is a massive blow for motorists who have already suffered at the hands of petrol price hikes and insurance premium tax increases, and unfortunately we do not think we’ve seen the worst of it,” said Simon Lamble, product director at Confused.com. “In the last two years visibility of the market through price comparison sites has kept prices down and driven up competition. In order to secure customers insurers have been forced to repeatedly slash their margins, but inevitably this could not continue.”
Lamble pointed out that insurer Zurich announced in January that it was looking to raise prices by up to 20%. “It appears the rest of the industry has followed suit in a bid to get back to profit,” he said. “Increasing claims costs, more injury payouts and fraud have created a situation where providers are not making any money.”
Peter Lee, partner at EMB, added: “The dramatic increases seen in the quarter, including a month-to-month rise of over 6% in April alone for comprehensive cover, come off the back of the reporting of some pretty horrendous 2009 results. Insurers’ 2009 Financial Services Authority returns showed that the average private car insurer incurred costs of £122 for every £100 of premium received.”