Insurance blow for drivers as bills soar

Cost of premiums rises five times faster than inflation

INSURANCE premiums for Scottish drivers are rising by more than five times the rate of inflation, alarming figures have revealed.

The price of car insurance policies has risen by an average of 16.2 per cent in just one year, while over-50s suffered even larger increases.

Research found despite paying the lowest car insurance premiums in the UK, drivers in Scotland have seen the cost of their policies increase to an average of £518 over the past 12 months.

More insurance claims from older drivers mean premiums for over-50s are rising faster than the average – at 16.5 per cent.

However, older drivers still pay the lowest bills at £434, compared with an average of £1,719 for motorists aged under 25. Drivers in London and the North West of England face the highest annual bills at more than £1,000 a year – almost double the amount paid by drivers in Scotland.

Average motor insurance premiums have increased by 32.2 per cent since October 2013, according to Consumer Intelligence, whose data is used by the Government’s Office for National Statistics to calculate official inflation statistics. The current inflation rate is 2.9 per cent.

Experts say that government proposals to increase the so-called Ogden discount rate – meaning insurers will pay out less per £1,000 worth of loss calculated – have helped stabilise prices but tax rises, the weakness of the pound and rising claim costs mean premiums are still climbing.

John Blevins, pricing expert at research agency Consumer Intelligence, said: ‘Prices are stabilising but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another insurance premium tax rise in the Budget.

‘Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars which cost more to repair, but also because the weaking ness of the pound means the cost of parts is rising.

‘Older drivers are being hit with higher premiums because they are driving for longer and consequently becoming involved in more accidents.’

Younger drivers are benefiting from telematics devices – which are fitted to cars to measure drivaffairs standards – to bring average costs down.

The research found that almost two-thirds (65 per cent) of the most competitive prices for under25s come from telematics policies, while prices for younger drivers are still slightly lower than in 2013.

Such gadgets have also been found to benefit older drivers, with 11 per cent of the best deals for those aged between 25 and 49 available from telematics, and 7 per cent for those over 50.

Along with London and England’s North West, the West and East Midlands were found to pay the highest premiums, with the average policy costing £882 and £716 respectively.

Motorists in Wales paid only £55 more than Scottish drivers, while the third-cheapest policies were found in the South West of the UK, where annual premiums came to an average of £623.

‘Cost more to repair’