Average car Insurance premiums to pass £700 this year ~ station of gear

Choosing the right insurance for your van

Insurers blame lack of competition, rising levels of fraud and higher repair bills when passing growing costs on to motorists

2016-10-07 15:15

The average cost of car insurance in the UK is expected to rise past £700 by the end of the year as insurers continue to pass on increasing costs to motorists, a new report has said.

The study by comparison site comparethemarket.com found a growing gap between the average and the cheapest car insurance deals on the market. The gap, known as the savings variable, has grown to £118 between June and August - the greatest gap on record. The average cost of an insurance policy has risen by £92 from a year ago to £697 at the end of August.

At this rate, drivers who automatically renew their policy are predicted to pay on average £739 by the end of the year, while those who shop around could save up to £130 by opting for the cheapest deals.

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However, the report found that even the cheapest deals have grown in price by five per cent over recent months and could grow by another £30 by the end of the year. For the past six months, the cheapest premiums on the market have been more expensive than the cost of an average premium in 2012.

The report blamed a lack of competition, rising levels of insurance scams and higher repairs bills, along with the recently hiked Insurance Premium Tax as factors contributing to the rise in premiums.

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Dan Bass, head of motor insurance at comparethemarket.com, said: “2016 has been tough for British drivers, with premiums rising consistently throughout the year. When you consider that the quarterly “switching saving” for the same period in 2013 was only £78 – rather than £118 today – it becomes easier to see how the cost of insurance has been driven up over the years and motorists’ pockets have taken a serious hit.

“Previous data suggests that we can expect to see a rise in motor insurance throughout the rest of the year. There are a number of factors contributing to this rise, but clearly insurers are not feeling any competitive pressure to reduce their prices.”

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Martin Saarinen

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