Home Market Research shows car and home insurance premiums are significantly increasing

Research shows car and home insurance premiums are significantly increasing

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Car insurance premiums are rising faster than at any time over the past 15 years, according to the latest quarterly index from a leading insurer.

The index, which tracks the quarterly movement of car and home insurance quotes, recorded a 5.6 per cent jump for comprehensive car insurance, over the three months ending 30th September.

This is the biggest single quarterly jump since the Index started in 1994. The index has also shown the greatest-ever annual increase with 14 per cent added to the average comprehensive premium.

The Index analyses quotes from over 90 insurance companies, brokers and schemes for 1,000 ‘customers’ nationwide. The average quoted premium for an annual comprehensive car insurance policy now stands at over £821, compared to £778 in July 2009 and £721 in October 2008.

“Most drivers will be seeing sharp increases when they renew their annual insurance premiums,” said a spokesperson for the insurer. “The Index suggests that 89 per cent of insurers have increased their premiums by more than £5 over the past quarter. Only 2.5 per cent reduced them.”

The Shoparound index, which is an average of the cheapest three quotes for each ‘customer’ in the Index and closer to the price customers would pay after shopping around, showed a slightly lower increase of 4.8 per cent, to just under £552.

Key factors fuelling premium increases:

– Fraud cost the industry £1.9bn, equivalent to £44 for every household’s home insurance costs.

– Personal Injury claims and associated legal costs are rising, topping £9.6bn last year, of which 40 per cent was legal costs

– Around 1 in 20 drivers is uninsured. Police success in prosecuting uninsured drivers and confiscating their cars (around 185,000 last year) doesn’t seem to be discouraging people from risking driving without cover to save money, despite the likelihood of being caught

– Car thefts are rising, especially expensive models, by first stealing the keys, with 15 per cent more claims over the past year

– Insurance underwriting losses – about £110 paid out for every £100 taken in premiums coupled with depleted reserves and poor investment returns