First drop in comprehensive motor premiums since 2008

Car insurance prices have fallen for the first time since late 2008 for comprehensive cover, according to research on more than four million quotes by Confused.com and Towers Watson.

The cost of comprehensive cover fell by 3.3% in the first quarter of 2012, with third party, fire and theft (TPFT) premiums seeing a smaller decrease of 0.4% in the same period.

The research showed that the average cost of a comprehensive policy at the end of March 2012 was £816, a reduction of £19 over the past 12 months. At the end of 2006, the average cost of a similar policy was £506.

Prices vary considerably according to age, with 17-20 year olds paying an average of £2,499 in the first quarter of 2012, while those aged 66 and over typically pay £438. Since the year end, premiums for 17-20 years olds have fallen by £92 and those aged 66 and over by £13.

Drivers in Manchester and Merseyside aged 17-20 face the most expensive premiums in the UK, paying an average of £5,530 for comprehensive cover.

Towers Watson global pricing and product management leader Duncan Anderson said: “After several years of exceptional increases, insurers seem to have addressed profitability issues caused primarily by spiralling bodily injury claims. Whilst this is good news for consumers, claims inflation has not gone away and uncertainty in the market remains.

“Later this year, the EU ruling outlawing discrimination of premiums on the basis of gender means that insurers will be pushing through a number of changes to their rating structures with resulting rates likely to be volatile for a period, particularly for younger drivers.”

Confused head of motor Gareth Kloet said: “After several years of significant price increases, the latest index shows a small decline. Whether this is a sustained trend or a blip remains to be seen.”