Higher premiums hit drivers of most ages

DRIVERS in nearly all age groups are paying record amounts for their car insurance and could face further increases, the Association of British Insurers (ABI) warns.

From 2015-16, all age groups except under-21s (where increasing use of “black box” telematics policies is keeping premiums under control) faced rises in their average premium, the ABI said.

People aged in their late 50s and late 80s have experienced the highest annual rises, at nearly £35 typically. The average price paid for comprehensive motor insurance across all ages is £462, a rise of 8% in the past year, according to the ABI Motor Premium Tracker.

The ABI said there could be more increases between now and the start of next year, as insurers look to reinsure against large risks, such as catastrophic personal injury claims, during this period. A particular spike in reinsurance renewals is predicted around January 2018.

The ABI said the Government’s decision in February to cut the personal injury discount rate “massively increases claims costs” and “will inevitably lead to higher premiums”.

The rate helps to set compensation payouts when people suffer serious injuries, for example following a car crash. When victims of life-changing injuries accept lump-sum compensation, the rate is applied to calculate the payout, taking into account the potential returns they could expect to receive from their money over time from investing the cash.

The ABI also said recent insurance premium tax (IPT) rises will also have had an impact as premiums have pushed upwards.

The ABI said that while the it is pleased with Government plans to reform whiplash-style personal injury compensation, “the benefits could be wiped out if they don’t defuse the discount rate bombshell”.

Average motor premiums by age group, according to the ABI, with the annual rise in cash and percentage terms: 18-20: £973 (-£24, -2.37%) 21-25: £676 (£0, 0.01%) 26-30: £521 (£28, 5.71%) 31-35: £450 (£23, 5.49%) 36-40: £413 (£27, 7.07%) 41-45: £373 (£23, 6.69%) 46-50: £354 (£18, 5.44%) 51-55: £339 (£30, 9.61%) 56-60: £311 (£34, 12.19%) 61-65: £283 (£23, 8.73%) 66-70: £260 (£14, 5.51%) 71-75: £276 (£14, 5.51%) 76-80: £320 (£23, 7.69%) 81-85: £398 (£29, 7.75%) 86-90: £476 (£33, 7.40%) 91-plus: £546 (£32, 6.25%)