There are conflicting views over whether motor rates are hardening

Not so long ago news that Norwich Union was to raise private motor rates would be enough to turn a soft market hard. In 2006 motor brokers piled pressure on insurers to raise rates in bid to jolt start a return to profitability in the sector.

NU responded willingly, closely followed by RBS Insurance, while Allianz said it would re-consider its rating model in 2007.

Enough time has now passed to assess the market and whether those rates hikes have made their way onto the high street.

This week the AA British Insurance Index, the most widely respected benchmarking system in personal lines, showed a rise of 2.5% in the second quarter of 2007 to £822. This beat the previous high recorded by the index in December where rates reached an average £802.

This appears to conflict with the index circulated by which says that rates have fallen off by 4.6% in the second quarter to an average of £703 in June.

Experian agrees that rates have hit an all time high, but its survey suggests that that high is significantly lower than the figures circulated by the AA at £529 for comprehensive cover from an intermediary.

It makes for some confusing reading.

There can be no doubt that the way the cycle is formed is changing. The emergence of aggregator websites and increased competition in the sector has skewed the traditional hard/soft market routine, and has meant that NU and RBSI can no longer exert the same power and influence over the market as it did some years ago.

Yet in this bleak picture a window of light is opening for brokers. Experian says it is now cheaper to buy motor cover from a broker rather than direct.

Graeme Trudgill, Biba’s technical services manager, said motor rates were under pressure from aggregators, but brokers are still believed to add value to customer services.

“Aggregators are price focused but the excess is still there and people are losing out. There is a real concern about the advice which aggregators are giving. When it comes to handling claim broker are much more successful,” he said.

Driving the message home to consumers about the range of price available on the market will win brokers clients, Biba argues.