Car insurance rises by 16% – and there’s more to come

The UK car index, which looks at 4 million car insurance quotes, shows that in Q1 2017 UK car insurance premiums have gone up by around 16% (£110 per year).

More worryingly is that action to cut the Ogden discount rate which governs personal injury claim amounts and an increase in Insurance Premium Tax (IPT) mean that car insurance premiums will continue to accelerate.

 

Scottish driver are facing the largest average car insurance increases

  • Scotland Highlands & Islands increasing by 21% or £121.
  • East & North East Scotland increase of 20%
  • The Borders & Central Scotland increase of 19%

 

While nearly all drivers will experience a rise in premiums there is some good news for younger drivers. Premiums for 21 to 24-year-olds are rising slightly more slowly at 7.8% a year thanks to the increasing use of telematics insurance, commonly known as black box insurance.

 

John Blevins, a pricing expert at Consumer Intelligence, said: “There are already signs that the Ogden discount rate ruling is having an impact on premiums and the next IPT rise in June will add to the pressure.

“There were signs that price rises were levelling off but that is sadly no longer the case with all indications now that the only way is up. With inflation running at 2.3% it is clear that drivers, who have no choice over whether to buy insurance, are facing a squeeze on their budgets.

“Black box technology is helping younger drivers to some extent while the price rises for over-50s at around 10.8% a year reflect how insurers are adjusting risk to reflect the fact that our ageing population is driving for longer.”