Reuters is reporting that Comprehensive motor insurance policy costs in Britain rose by 5% on average in 2019, the steepest annual rise since 2017, according to an insurance price index survey.
A traditional Fully Comp policy now costs £815 on average, according to the latest index from price comparison site Confused.com in association with insurance underwriter, Willis Towers Watson (WLTW.O).
The index climbed 4% in the fourth quarter compared with a year earlier.
British motor insurers have been struggling with high costs, tougher environmental rules as well as a threat of tariffs on car imports and exports, if a post-Brexit trade deal is not negotiated with the European Union before 2021. This might make a slight difference to claims settlements, assuming retail/resale values on written-off cars go up, although the bulk of any motor claim cost is PI, admin and repairs.
“Many of the challenges observed throughout 2019 will persist in 2020, as cost pressures remain from expensive vehicle repairs, theft claims, last summer’s discount rate change, Brexit-related uncertainty and IPT increases,” Graham Wright, UK lead of P&C Personal Lines Pricing at Willis Towers Watson, said.
Insurance premiums have remained volatile for a fifth straight quarter, Wright added.
The index, based on price data submitted by customers to insurer Admiral Group’s Confused.com, showed the annual cost of comprehensive car insurance increased across the UK, with motorists in Inner London hit by the sharpest annual rise at 8%.
Based on demographic factors, premiums for female drivers aged between 26 and 30 rose the most at 9%. Male drivers aged between 17 and 20, whose premiums rose 6%, continue to pay the highest premiums.
Overall however, the trend amongst the under 30s, especially those living in cities, is away from car ownership and onto public transport and bicycles. But this is not a happy choice, many would like to own a prestige car, but cannot afford the monthly payments on top of rent, council tax, food, heating, wifi etc. The fact is that many younger UK consumers can ONLY buy/lease and insure a car, if they live at home virtually rent-free with their parents. That is something the insurance industry is going to have to live with for the forseeable future.