Motor rates continue to fall - Confused/Towers Watson

The latest Confused/Towers Watson car insurance pricing index has shown a 12.5% drop in the average premium over 2013.

The average UK premium now costs £644 for a fully comprehensive policy.

However, over the last quarter of 2013 rates fell by just 1.1%, and males saw prices increase by 0.9% over the quarter compared with a 3.2% decrease for females.

Towers Watson UK non-life insurance leader Karl Murphy said that this was a result of males no longer benefitting from the corrective action that arose immediately after the gender directive.

“The large majority of insurers have bedded down gender-neutral prices in their systems, giving them the confidence to make the selective pricing actions that we are starting to see coming through in this quarter’s figures,” he said.

Despite the gender directive being in effect for more than 12 months, premiums for males and females still differ.

The average policy for a male cost £671 on average in Q4 2013, whereas the average female policy cost just £610, a difference of £61. However, this is down from a price difference of £112 before the implementation of the gender directive.

Murphy said this current gap was not because of insurers pricing policies based on gender but on other differences male and female risks present.

“Other factors than gender go into making up individual premium,” he said. “For example, men generally drive more powerful cars, which are evidenced to be at higher risk of being in accidents, resulting in a higher average premium [for males].”

Gemma Stanbury, head of car insurance at Confused, said: “With the EU gender directive coming into effect at the end of 2012, it’s clear to see that the insurance industry has reacted to the change in legislation over the last year.

“Prices between men and women have evened out over the year, seeing a price difference of only £61, compared with a significant price difference of £112 (males £807 compared with females £695) seen in Q3 2012.”