The average cost of comprehensive car insurance has risen by £82 over the last 12 months, according to the AA’s latest update to its British Insurance Premium Index (BIPI).
The AA British Premium Index has kept track of insurance prices on a quarterly basis since 1994. It measures the five cheapest quotes for each customer available via brokers, price comparison sites and directly to provide an average ‘shoparound’ price.
The index reported that comprehensive insurance prices jumped by 3.7% over the last quarter (three months ending 30 September), a total increase of 16.3 over 12 months.
Michael Lloyd, director of AA Insurance, said: “We are witnessing sustained price increases once again, which is bad news for drivers. And I can’t see an immediate end to the current upward trend.”
Older drivers see biggest price rise
Drivers aged 60-69 saw the biggest premium increase, up 5.4% over the quarter and 11.9% over the year. But at £366, drivers in this age range still enjoy the lowest average premiums.
Young drivers aged 17-22 still pay the most for car insurance. Average premiums for this age group saw a 3.6% increase in the last quarter, reaching £1,286.
Whiplash and tax among the causes
Around £18 of the increase can be attributed to insurance premium tax (IPT), which has been increased twice in the last 12 months. The first increase, which raised the level of tax from 6% to 9.5% of every premium, came into effect in November 2015. This was followed in October this year with a further 0.5% increase — meaning drivers now pay 10% insurance premium tax on every car insurance policy.
The rise could also be blamed on what the AA calls a ‘persistent whiplash epidemic’. It is estimated that whiplash claims cost £2 billion per year, and this could be exacerbated by claims firms pressuring drivers to claim after even minor accidents. The 2015 Autumn Statement announced a set of reforms designed to curb the activities of claim firms, but no measures have yet been taken.
Lloyd said: “The whiplash epidemic has dogged the British motor insurance industry for a decade and continues to do so.
“Drivers are still being pressured into making claims for often minor collisions they might have forgotten about. This is pushing up claims costs, because insurers can’t prove that an injury wasn’t suffered.”
For those wishing to cut the cost of their car insurance, shopping around is a good starting point. Compare quotes with uSwitch below and see if you could save.