Car insurance premiums are still some 2% higher than at the end of 2016, despite falling from their highest ever level during the middle of 2017 when they touched £713.02.
The average quoted Shoparound premium dropped over the last three months of the year by 1.7% to £666.94 (from £678.18 at the end of September).
|But Michael Lloyd, the AA’s insurance director, believes that premiums could rise again during 2018., saying, “Several factors are affecting the yo-yo nature of car insurance premiums.
“Most significant was the decision by the government to review the so-called discount rate that is used to set the amount of compensation received by those suffering injury in a car crash. The rate fell from 2.5% to minus 0.75%, sharply increasing the cost of insurance claims and that in turn led to premium increases.
|Regionally, the North-West is the costliest region to insure a car despite a 1.1% fall in average quoted premiums to £916.18.
This is followed by Northern Ireland which saw a 4.8% fall to £884.65 while London comes third with a 1.4% drop to £833.43.
Scotland remains the cheapest region to insure a car with the average Shoparound quote of £487.11 following a premium fall of 0.9% over the last quarter of 2017.
“Now the Government has recognised that the cut was too much and has agreed to review the rate and that has helped to stop premiums rising further. But as we enter 2018, the reinsurance companies that underpin the consumer insurance sector are increasing rates quite sharply, reacting to the discount rate and that will find its way to the premiums drivers pay.
“The insurance market is extremely competitive. Rises could be tempered if the government presses ahead with its planned reforms to curb the whiplash compensation culture and succeed in stopping cold-call law firms who try to persuade people to make claims following a car collision, even if they haven’t been injured.”
Lloyd is also urging the Government to steer clear of any plans to increase Insurance Premium Tax, which doubled from 6% to 12% over just two years.
He concludes: “While car insurance premiums will be under pressure to rise, I think recent comments suggesting they will could be approaching the £1,000 mark by the year end are somewhat pessimistic.”
Young drivers (17-22) continue to pay by far the highest premiums – on average, £1,625.78, down 3.8% higher than the end of September. Young men tend to pay higher premiums than young women reflecting differences in car choice, mileage and occupation.