Comprehensive car insurance premiums fell by 1% in 2020’s Q1

Comprehensive car insurance premiums have fallen by 1% or £6 in the first quarter of 2020, with UK drivers paying an annual average premium of £809, according to research by aggregator Confused.com in association with Willis Towers Watson.

Its latest Car insurance price index report, which is compiling using around six million customer quotes per quarter, further showed that car insurance premiums in the UK rose by £47, or 6% over 2019.

Graham Wright, UK lead of property and casualty (P&C) personal lines pricing at Willis Towers Watson, said: “Premium levels for the first quarter have continued to fluctuate monthly with little evidence of an emerging overall trend, which reflects the uncertainties faced by the market and the challenge of balancing conflicting future trends.

“The index data represents a largely pre-Covid period and does not yet give insights into the market’s pricing response to Covid-19, although there is widespread recognition of claim frequency reductions whilst lockdown measures persist and acknowledgement that these may be offset to some degree by severity increases, all of which adds to the uncertainty in the market.

“Notwithstanding the specific impacts of Covid-19 on driving behaviours, the current situation makes future prediction of claims inflation, the timing of the Civil Liabilities Bill implementation and the impact on future reinsurance costs all the more challenging.”

Insights

Regionally, drivers in central and north Wales had the greatest quarterly drop in prices, as premiums decreased on average by 3% or £22 to reach £637. The Scottish Borders and the East Midlands, on the other hand, experienced the largest rises in comprehensive car insurance costs, as these increased by 2% and 1% last quarter respectively, amounting to £10 and £11 price hikes.

Driving further into the data, the City of London recorded the steepest incline in premium prices with increase of 19% or £218 in 2020’s Q1 – drivers based here have paid an average of £1,389 in the last three months. East London is the most expensive place to buy car insurance, with drivers here shelling out £1,465 a year.

At the other end of the scale, Salisbury saw the largest quarterly drop in premium prices with reductions of 12% or £82 – this saw car insurance costs decrease to around £600. The cheapest town is Llandrindod Wells, in Wales; comprehensive car insurance policies in quarter one of 2020 here cost £550.

In terms of age, male drivers aged between 26 and 30 experienced the biggest price hikes of around 1% or £8, with annual premiums now amounting to £1,093. Male drivers aged 71 or over, however, saw the greatest price fall in 2020’s Q1 compared to other age groups, recording a 4% or £20 quarterly price decrease. Annual premiums for this demographic is now £525.

Steve Fletcher, head of data services at Confused.com, added: “If there’s one thing we know for certain it’s that insurers don’t like uncertainty.

“There is evidence to suggest that it will be a while before prices calm down and that they will continue on the upward trajectory we’ve seen over the past year and a half.

“While we don’t expect insurers to introduce discounts to account for fewer miles being driven, people are looking to make savings at this financially challenging time.

“The winners will be the insurers that listen to customer needs and simultaneously react to market movements. Societal uncertainty means insurers will need to closely follow this situation as it unfolds.”