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17th January 2021
UK car insurance premiums fell by 6% in 2020
Comprehensive car insurance premiums have fallen by 6%(£52) during the last 12 months, with UK motorists now paying £763 on average, according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.
The average cost of car insurance has now fallen for four consecutive quarters, although the rate of decline slowed in the final quarter of 2020 at just 0.2%, according to the price index based on price data compiled from almost six million customer quotes per quarter.
Graham Wright, UK lead of P&C Personal Lines Pricing at Willis Towers Watson, comments “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. However, most of that reduction was evident 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.”
The greatest annual decrease were male and female drivers aged 71 or over, who saw a 9% price decrease taking their premiums to £498 and £417 respectively. Male drivers aged between 17 and 20 are still paying the most of any demographic-with premiums decreasing by just 2%-and now pay on average £2311 compared to £2369 one year ago.
Wright aded “The outlook for 2021 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. The ongoing situation makes future prediction of claims inflation, the Civil Liabilities Bill implementation (recently delayed to May) and the impact on future reinsurance costs all the more challenging.”
Louise O’Shea, ceo at Confused.com comments “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. It’s been nearly 12 months since we first went into lockdown and this has put so many people in a difficult situation, so I have no doubt this news will be welcomed by many. People are at home and driving less and car insurance prices are reflecting that.
As customers adapt their behaviour and insurers anticipate further industry changes, our analysts will be helping insurers to navigate this volatile period. 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.”
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