1st April 2015
The average car insurance premium has risen by an average of £21.90 year-on-year to £561.10 in February and prices are likely to rise further still the latest data shows.
The study by Comparethemarket.com, also found that three quarters (75%) of UK adults would support making it a legal requirement for under 25s to have a telematics device fitted in their cars. Telematics is the use of on-board computers or smartphone apps to measure how safely a motorist drives in order to calculate a premium that is based on risk. Half of 18-24 year olds would support compulsory telematics for young drivers.
The comparison website revealed that competition levels around motor insurance pricing have dropped to their lowest quarterly level in the last three years, indicating that premiums will continue to rise this year.
If premiums continue to rise, young drivers will be hit the hardest. Currently, the average policyfor a driver under 21 is £1,422.66. This has risen by almost £20 in the last month alone. This average premium is 376% – or £1,124 – more expensive than a policy for somebody aged between 50 and 64 who pay on average £299.13.
Premium Drivers also found that over one in five (21%) drivers under the age of 25 can currently save on average £335.42 by taking out a telematics policy.
Julie Daniels, head of motor at comparethemarket.com, says: “Although prices may have fallen from their seasonal high in December, people should not be fooled into thinking that premiums are falling – year on year they have risen. What’s more, the movement of the savings variable tells us that competition is falling and this will ultimately push premiums up. People who don’t switch and perhaps just let their policies automatically renew without shopping around, will be most affected.”
Daniels adds: “It appears that telematics is viewed as a solution to combat road accidents, encourage safe driving and make driving affordable for young people. It will be interesting to see if these views are heeded by the next Government – were telematics to be made mandatory then this sub-sector of motor insurance would suddenly become very competitive and we would see insurance premiums probably fall as a result. The key question is whether or not they encourage and ensure safe driving – obviously the majority of UK adults think that it does. Telematics policies are not just for young drivers so, given the positivity around its benefits, it will be interesting to see if more of these policies are taken out in future by motorists of all ages.”