2016 saw car insurance premiums rise by 14%, or £95, according to the latest confused.com price index.
The index, powered by Willis Towers Watson reveals that drivers can expect to pay £767 for a comprehensive policy. This means that car insurance is at the highest level since 2012.
With the average Third Party Fire and Theft policy at over £1300, its recommended that drivers who are interested in this level of cover also look at getting quotations for Comprehensive cover, as this may work out cheaper.
The AA said that premiums had been driven up by continued problems with whiplash claims and consumers growing tendancy to shop around for a new policy each year. As a result of this, insurers have become less inclined to offer large introductory discounts to attract new customers. Technology has also contributed to the increase, as additions to cars such as sensors on bumpers have increased the cost of accident repairs.
Credit hire remains a significant problem. with more and more people opting to go down this route rather than accept an inferior courtesy car from the repairers or allowing the insurer who is at fault to source them a vehicle. A two year investigation by the Competition and Markets Authority (CMA) in 2014 concluded that the hiring of courtesy cars via CHCs costs consumers an extra £84m in increased premiums.
Cold callers and ambulance chasers continue to exploit the system, and the government has also doubled Insurance Premium Tax in just over a year.
Motoring editor at Confused.com, Angela Stratton, warned that whilst insurers are doing what they can to keep costs down, they are still not making a profit. She said: “The most recent figures show that, for every £1 that an insurance company takes in premium, its costs are more than £1.01.
“We saw a similar increase in premiums at the end of 2009 through to the beginning of 2010 and it continued at even greater rates until mid-2011, when we started to see the decrease.”