Motor Insurance premiums rise in the third quarter for the first time in over 3 years

Car insurance premiums have increased in cost for the first time in a shade over 3 years, potentially marking the end of a period of cost-effective cover enjoyed by consumers across the UK.

UK motorists have seen the cost of their cover fall by a third since 2011, yet figures released by a reputable price comparison website suggest that peopleís pockets everywhere could be burdened by pricier premiums.

Although premiums for fully-comp policies only rose by 0.4% across Q3, there is a growing belief amongst internal insurance heavyweights that this small increase is a precursor to far greater expense faced by car-owners across the nation.

This perspective is reinforced by the recovery that Esure, internet & telephone insurance firm, has seen its shares enjoy since the end of the last working week. As such, shareholders will hope that this represents an end to the pricing competition within the motor insurance sector that has hampered their profits so significantly over the last 3 years.

Despite being a marginal, somewhat trifling increase, the significance of this rise cannot be understated as it represents the first quarterly increase since 2011.

Teenage drivers have been subjected to the greatest increase in insurance, with those aged 19 seeing a raise of £56 over the third quarter yielding an average yearly premium of £324; an average 20 year old motorist will part with an additional £41 in insurance costs.

Experienced drivers will not be spared higher premiums, as 66 year old motorists have been hit with an increase of £19 to their premiums whilst 69 year olds face a £9 upsurge in their policies.

However, drivers in their 40s have seen their insurance policies fall over the third quarter by up to 2.8%, revealing variance in pricing patterns by insurers.

Policymakers will not welcome the increase to car premiums, as they have undertaken several measures to curtail the cost of car insurance. These include supposedly addressing the number of false whiplash claims, through reducing the amount third parties can earn from personal injury work. Moreover, through more thorough investigation into the proliferating number of false whiplash claims, government has enacted tangible legal reforms to address the matter. News of costlier premiums will be a discordant tune indeed to ears of certain ministers in Westminster.

Stephen Jones, UK top dog of Tower Watsonsí property and casualty pricing division, implied government measures have not been as successful as hoped: ìRecent price cuts were heavily predicated on third party injury claims costs reducingî.

However, according to Mr Jones, there are clear indicators of insurance claims ìcreeping up againî in number.

James Daly, top dog at Fairer, warned motorists to act quickly in order to prevent their policies from rising exponentially. Daly infers that falling premiums relies on a competitive, honest market with fewer haphazard personal injury claims and increased usage of price comparison websites, which offer competitive prices in a clear manner.

ìSwitching every year is crucial. The whole insurance market is set up to offer you cheap prices – often loss-making for the insurer – so that drivers will be switched to a more expensive premium after their first year.î

ìInsurers are facing a downward pressure on costs because more people are shopping around and they have to offer competitive prices,î he said.

Mr Jones asserts that at present it is difficult to forecast which direction the car insurance sector is shifting: “The latest quarter has provided a real mixed bag of modest up and down pricing impacts on consumers, making it difficult to call how and in which general direction prices might move next.”

Almost needless to say, drivers up and down the UK ought to be on their toes.

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