Motor premiums go up at supermarkets while overall market prices fall

Supermarkets are raising their motor insurance premiums despite a continued fall in overall market rates, according to car insurance search site,

The survey found that in the final quarter of 2003, the supermarkets were responsible for nearly all of the total price rises in the market. In contrast, only 6% of price reductions came from supermarkets.

This is a marked change from the previous quarter. In the period from June to September, found that supermarkets accounted for 30% of price increases and 69% of price decreases. managing director Kate Armstrong said: "The supermarkets were pricing quite aggressively in the third quarter, but in the last quarter have adjusted some of their pricing upward. This may be pressure from their underwriting partners to ensure profitable accounts."

But Tesco head of insurance Paul Baxter denied this was the case: "We have not changed our pricing policy."

Despite the supermarkets' price increases, the survey found that overall motor rates had fallen.

Armstrong said: "The figures suggest a continued slight fall, driven mainly by the direct writers."

The broker segment was responsible for 45% of price decreases, and the direct writers nearly 49%.

  • The average cost of comprehensive car cover has risen slightly over the past quarter, according to the figures from the AA.
  • According to its British Premium Index the typical premium now quoted for comprehensive cover is 0.25% higher than in October, at nearly £761.

    But the rate of increase is slowing. Over the previous quarter average rates experienced a 1% rise.

    AA Insurance Services general manager John Close said that the growing number of internet insurers as well as those selling through supermarkets was helping to keep premiums down.