Car insurance prices 'falling at record rate'

 
Cars 'No-win, no-fee' cases are now more expensive to pursue

Related Stories

The cost of car insurance is falling at a record rate in the UK, according to the insurance arm of the AA.

The average annual comprehensive car insurance quote fell to £594.84 this month, it said, down 9.8% from £659.53 last July - the biggest decrease since the AA insurance index began in 1994.

It said the dip was thanks, in part, to clampdowns on fraud and restrictions on claims management companies.

Despite the fall, premiums remain much higher than they were six years ago.

Third party, fire and theft quotes also fell between July 2012 and this month - down 4.8% to £820.58 on average, AA Insurance's research suggested.

BBC business correspondent Joe Lynam said the 9.8% fall in comprehensive cover quotes follows a 6.4% fall over the course of 2012 - itself a record.

But he adds that the cost of insuring the average car is still twice as much as it was in 2007.

Gender equality

At the start of April, a ban on referral fees was introduced.

Insurance premiums are far higher than they were in 2007

They were paid by lawyers and claims management firms to breakdown firms, brokers and the insurers themselves, in exchange for providing information about accident victims.

Also, anyone suing for accident damages with the help of a no-win, no-fee lawyer - known as a conditional fee arrangement - now has to pay their lawyer's success fee from their own funds if they win their case.

It was previously added to the bill of the losing party.

This has made claims more expensive to pursue.

And new gender equality laws have lowered premiums of men by far more than expected while women's premiums have remained static, according to AA Insurance's research.

Fraudulent claims - especially for whiplash which is often difficult to disprove - are also down.

AA Insurance director Simon Douglas said insurers previously faced "a fast-widening gap between premium income and claims costs - largely driven by whiplash injury claims and fraud, which saw very sharp premium increases between 2009 and 2011".

"That gap is closing and premiums are falling again thanks to competition, as well as improved fraud detection by the insurance industry and tightening of the law that is beginning to curb the number of spurious new whiplash injury claims," he said.

'Treated unfairly'

"The news that hundreds of rogue 'no-win no-fee' claims firms have been reined in is welcome and, in part, falling insurance premiums reflect that."

Graeme Trudgill of the British Insurance Brokers' Association said uninsured driving costs the industry £500m, whiplash claims £2bn and fraud £1bn.

But these costs were now coming down, he added, because of a concerted effort by the industry, with "discounts now feeding through to policy holders".

Justice minister Helen Grant said: "We are turning the tide on the compensation culture which has pushed up the cost of insurance for drivers, schools and business - and taking another important step to reducing the cost of living for ordinary people."

Earlier this month, City regulator the Financial Conduct Authority launched an investigation into insurance companies for overcharging customers when they renew their car and house policies.

The FCA says automatic renewal can lead to customers being treated unfairly.

BBC Radio 4's Money Box revealed in March that loyal customers often pay much more than new ones for insurance.

The insurance industry says consumers can shop around for the best prices in a competitive market.

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -37

    Comment number 103.

    Surely a common sense way to insure cars is for the insurers to give back 95% of the premium you pay if you don't make a claim for that term.

  • rate this
    +21

    Comment number 93.

    Just renewed my car insurance 1 week ago, current supplier could not match the other 108 companies from my internet quotes. I didn't choose the cheapest from £170 fully comp. when going through the internet sign up they added extras, I chose one that gives fully comp as it is supposed to be, nothing extra to pay and included break down cover, all for £220 - £140 cheaper than my renewal quote.

  • rate this
    -46

    Comment number 79.

    Its still pretty cheap when you consider what insurance doesn't pay for especially to the NHS for treating road traffic incidents, policing costs and the effect of pollution on the environment.Yet again the motorist is getting away with it. One of these days the motorist will actually pay a realistic price. But then it is entertaining too see how some people get into positions of reliance on cars

  • rate this
    +4

    Comment number 25.

    Interestingly my insurance costs have hardly changed over the last 10 years, except when I last changed my car.

    Maybe being a driver for 20+ years helps.

  • rate this
    -76

    Comment number 22.

    17. The right to be able to drive should be universal not just for the wealthy.

 

Comments 5 of 7

 

More Business stories

RSS

Features & Analysis

From BBC Capital

Programmes

  • Art installationClick Watch

    How one artist is using computer code to turn internet radio into a unique piece of music

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.