The average cost of car insurance fell slightly over the first quarter of 2007, after ending last year at an all-time high, the AA's benchmark British Insurance Premium Index shows.
The index – which has been tracking car and home insurance premiums since 1994 – shows that the average quoted premium for an annual comprehensive car insurance policy fell marginally, ending the quarter at £802, just £4 less than the all-time high of nearly £806 following the massive 4.35 per cent increase during the last three months of 2006.
Both home buildings and contents insurance premiums remain steady – buildings cover showing its second quarterly increase of a little over 1 per cent while contents cover also rose by just under 1 per cent, reversing a slight fall over the previous three months.
“I had expected premiums to continue rising and I think the underlying pressure is still upward. Most insurers continued to apply small increases in an effort to close the gap between premium income and claims costs,” says Kevin Sinclair, managing director of AA Insurance.
Another relatively mild winter has led to fewer claims for cold weather damage such as burst water pipes. Although some insurers are increasing premiums these rises are offset by heavy discounting by others.
Kevin Sinclair believes home insurance will rise in future. “But it will take several significant weather events to cause sustained premium increases. Insurers are concerned about the long-term effects of climate change – but it seems that in the short term mild winters are keeping claims – and thus premiums – relatively low. I'm starting to wonder – have we have found one of the few positive impacts of global warming?”
