Motor Insurance premiums to rise by 15%

Dagenham motorists renewing car insurance policies face the largest annual hikes ever recorded, according to new research from independent market research firm, Consumer Intelligence.

The research, which is used by the Office of National Statistics for its Retail Price Index, found that the average premium is now £564.69, representing a 19.6% increase from January 2009. The main factors fuelling these premium increases are the rising cost of personal injury claims and fraud.

The hike in premiums will see beleaguered GB motorists collectively facing a car insurance bill which has increased by as much as £2.1 billion in the last year. However, by shopping around for cover, the research shows that you can reduce your premiums by up to 35%.

The research shows that over 55% of those people who switched in 2009 were able to save more than £50.00. Younger motorists have been most affected by increased premiums.

Those aged between 17 and 24 have on average seen their annual insurance policy rise by 24.87% from £1,275.60 in January 2009 to £1,489.44 by December 2009. This increase is nearly twice as sharp as that faced by motorists aged 65 and over who have seen the smallest increase in premiums.

Ian Hughes, Managing Director, Consumer Intelligence, said: “The advent of price comparison websites had actually kept a lid on car insurance premiums for some time, but these figures show the upward pressure on pricing has well and truly broken through. The worry, obviously, is that this could result in more motorists simply choosing not to insure their vehicles and drive illegally, or feel that they can no longer afford to run a car.

“In order to reduce their car insurance premiums, motorists need to consider what sort of vehicle they drive, and make sure that they shop around for cover. With such a large number of providers to choose from, the difference between the best and worst quote can be huge.”

Consumer Intelligence’s research, which is based on over 100,000 quotes from providers across the entire car insurance sector for 2,000 different risk profiles, reveals that the average cost of an insurance policy in the most expensive quartile is now £646.25 - £188.42 higher than the average policy in the bottom quartile. Men are facing the most significant increases on their insurance premiums.

In the last 12 months the average policy for a man has increased by 20.1% to £599.65. This compares to an increase of 19.1% to £523.55 for women.

Survey Highlights:

  • The average annual motor insurance premium is £564.19, almost 20% higher than in January 2009.
  • Approximately 1.6 million drive cars without motor insurance, which leads to an increase of £30 per sold policy.
  • For 17 to 24-year-olds motor insurance premiums increased by almost a quarter, to an average of £1,489.
  • For drivers aged 65 and over the rise was just 15% to an average of £423.
  • 55- to 64-year-olds pay the least at an average of just under £376.
  • Motor Insurance premiums for men increased (20.1%) and women (19.1%).