Fewer journies and consequently claims saw premiums decline significantly last year
Car insurance premiums fells 6% last year as lockdown cut claims, according to the Confused.com Car Insurance Price Index in association with Willis Towers Watson.
UK motorists paid on average £763 for their premium in the last 12 months - a reduction of £52 - but the falling trend reduced to just 0.2% for the last quarter of the year, according to the report, which comprises data from nearly six million customer quotes per quarter.
UK Lead of P&C Personal Lines Pricing at Willis Towers Watson, Graham Wright, said: “Looking across 2020 as a whole, prices fell reflecting the impact of Covid-19 lockdown measures on the nation’s driving and consequential claims experience.”
He added that the most significant reduction was seen in the middle part of the year ”with more stable trends of late reflecting the competing upwards pressure on new business pricing arising from the forthcoming implementation of changes in response to the FCA’s market study”.
Other highlights from the study showed that the smallest decrease in premiums was seen in London (3%), while in some regions premiums fell by 10%. Harrogate saw the sharpest fall at 14%.
Wright said the outlook for this year remains uncertain. ”Not only are there competing pressures on price from Covid-related impacts on claims experience and actions in advance of the FCA fair pricing rules taking effect, but there are also many other challenges observed throughout 2020 that will persist for insurers into this year.”
Confused.com chief executive Louise O’Shea added: “People are increasingly sensitive to price in the current economic climate, meaning we’re seeing more and more people shopping around as they look to make savings.
”Those shoppers are seeing some of the biggest savings on their car insurance for a long while and it couldn’t come at a better time.
”The ongoing situation makes future prediction of claims inflation, the Civil Liabilities Bill implementation and the impact on future reinsurance costs all the more challenging.”
”We want to help insurers rise to the challenge and seize the opportunity to develop relevant offerings which are more suitable to customers’ changing needs,” O’Shea said.