30th December 2015
The price difference between the cheapest and average motor insurance premiums, at £107.71 per motorist, is at its largest since September 2012, according to the latest data from Comparethemarket.com.
The switching site’s research shows that over the past quarter, the price of cheapest or ‘shop around’ motor insurance premiums, blended across all age groups has risen by £50 to £567.90.
The average, or ‘auto-renewal’, premium has risen by almost £60 to £675.61. Comparethemarket.com expects motor premiums to continue to rise in 2016, as the ‘savings variable’, its tracker of price competition, has continued to expand gradually, showing little downward pressure on prices in the short term.
The main reasons behind this surge in costs could be the increase in Insurance Premium Tax, the falling competition in the market and a cyclical hardening market.
For younger drivers, prices are escalating. Even if under 25 year old drivers shop around for the cheapest price, they are likely to pay £1000 to insure their car – the highest point since February 2013.
The high cost of insurance for young drivers may be slightly offset for savvy shoppers, as under 25 year olds currently stand to save an average of £236 by shopping around for their insurance – whilst those paying an average price pay over £1230.
Simon McCulloch, director of insurance, comparethemarket.com, said: “Having enjoyed several years of falling prices, premiums are rising sharply. This has not been helped by the recent hike in Insurance Premium Tax, passed more or less directly onto motorists. In this kind of market it is utterly essential people search out the best deals for their car insurance – by automatically renewing you could well needlessly be spending hundreds of pounds extra.
“Young drivers are always at the sharp end of price rises and this cycle of price hikes is no exception. Telematics policies may offer an escape route to these hefty premiums, but only for those drivers who are willing to have their driving monitored.”