Car insurance premiums have fallen by 5.5% in 12 months, according to the latest car insurance price index published by Consumer Intelligence.
The report measures the cost of real customer quotes across price comparison websites and direct insurers.
The average comprehensive car insurance policy now costs £712 per year, 8.1% less than when prices peaked in September 2017.
It’s likely that the reduction in premiums is due to the cut in the Ogden discount rate used by insurers, as well as the fact there have been no further increases in the rate of insurance premium tax (IPT) since June 2017.
However, it’s not all good news for motorists. While premiums are now showing signs of reversing, they are still 21.9% higher than when the price index began five years ago.
John Blevins, pricing manager at Consumer Intelligence, said: “While it is likely that these falls may continue, there is still a way to fo for prices to return to 2013 levels. Even so, prices have come off the boil quite considerably in the past few months.”
Price by age
Young drivers, who typically pay the highest car insurance premiums, have seen prices fall by 11.9% in the last year. The average annual premium for drivers aged under 25 is now £1,635.
Consumer Intelligence has suggested this could be down to the growing popularity of telematics (black box) policies among young drivers, which has helped to push prices down. Almost two-thirds of the top five cheapest quotes for young drivers are from telematics providers.
Drivers aged between 25 and 50 pay an average of £629 for comprehensive car insurance policies, while over-50s enjoy the cheapest premiums at an average of £413 per year.
Price by location
The cost of car insurance does not just vary by age, but also by location. Drivers in London pay the most for cover, with average annual premiums of £1,024. However, the capital has seen prices drop in line with the rest of the country, at 5% less than this time last year.
Drivers in Scotland pay the least on average for their cover, with premiums at £522. However, this is a drop of just 0.1% compared to 2017.
The North West enjoyed the most significant reduction in premiums over the last 12 months, with average premiums dropping by 9.5% to £847.