Premium rates for both motor and home have remained flat for the fourth quarter in succession, revealed the latest British Insurance Premium Index from the AA.
The index also showed that while car insurance premiums have nearly doubled in the last ten years, buildings insurance rates have risen by only £2 over the same period.
Home insurance:
The first quarter of 2004 revealed a marginal drop in the average cost of buildings insurance premiums following in from a rise in the premiums during the last quarter of 2003.
AA Insurance Services director Neale Phillips said: “Given the number of subsidence claims that came in during the second half of last year, this is surprising.
“But the lack of bad weather related claims has helped to keep premiums in check. Nevertheless, many industry experts still expect to see a rising trend in home insurance over the coming year.”
The average premium for buildings insurance stands at £208.33, a fall of just 18p compared with the previous quarter, but the AA said by shopping around, a saving of up to £73 could be achieved.
Contents insurance premiums, however, have increased by half a percent, revealed the Index. Phillips said he believed this rise reflected the increasing values of home contents.
Car insurance:
According to the Index, the steeply rising trend in premiums over the past five years has been slowing and appears to be levelling off.
It found that the average premium for comprehensive cover rose by less than 2% over the past year, which was the smallest annual rise since 1996.
The typical premium now being quoted for comprehensive cover is £776.06, a fall of just 50p over the past quarter, according to the Index. But it said the average premium for those shopping around stands at less than £486, a fall of nearly £10 over the same period. The average premium for non-comprehensive insurance rose by 20p during the same period.
“Some providers are pricing car insurance to maintain profitability while others are chasing market share, as shown by the dramatic fall in the shop-around premium,” said Phillips.
“The result is market stability which we haven't seen for some years. It also means there is plenty of opportunity for savings for those prepared to shop around.”
However, Phillips did express concern about the possible impact of gender discrimination rules that are expected to be introduced by the EU later this year.
“The industry and the government are arguing for risk-based insurance to be exempted from the new rules,” he said. “If this doesn't happen there will be a huge impact on car insurance premiums.”
