Savvy shopping has RAISED our insurance bills
SHOPPING around for car insurance has actually increased the average premium, it emerged yesterday.
The rising number of car owners hunting out the cheapest deal every year means there is now less incentive for firms to offer motorists introductory loss-making prices – as customers have become less likely to renew when the introductory price ends.
The AA report found that the typical quote for someone shopping around for a comprehensive policy in the second quarter of 2016 increased by around £12.50 com- pared with the first three months of the year and around £84 compared with a year earlier.
On average, comprehensive insurance now costs £568, according to the AA’s insurance premium index.
Looking at what is behind the increases, Michael Lloyd, director of insurance at the AA, said: ‘Increasing numbers of car owners shop around for their cover every year, especially at a time when premiums are going up.
‘As more people look for introductory offers there is less incentive for companies to offer loss- making prices to attract new business that will, a year later, go elsewhere. So I believe this is one driver of recent premium increases, while insurers are looking for ways to better reward customer loyalty.’
Mr Lloyd added that prices were also being pushed up by false or exaggerated whiplash injury claims as they remain ‘unacceptably high, thanks to the persistence of coldcalling claims management firms’.
The prices quoted by the AA are an average of the five cheapest premiums that a customer might expect to get. The costs were taken from both direct and price comparison site markets.
Young drivers aged 17 to 22 years old, who already pay the highest premiums of any age group, saw the biggest jump in the cost of their cover, with 3.5 per cent or £42 added to a policy over the quarter, taking the average cost to around £1,240.
Drivers aged over 70 saw the smallest quarterly increase, with a 1.2 per cent upswing taking their average premium to £452.
Across the UK, the AA said Northern Ireland has seen the biggest increase in car insurance premiums over the period, with a 7.8 per cent increase taking the average shop-around premium to £804, making it the most expensive place to insure a vehicle.
The cheapest place to get car insurance is Scotland, where the average premium is £404, marking a 2.5 per cent quarterly increase.
‘More drivers shop around’