Car insurance premiums surge
Car insurance premiums have surged by an average of 2% in the last year, with drivers at both ends of the age spectrum being left out of pocket.
The over 25's and the over 50's are the worst affected by the latest price hike, according to new data from Consumer Intelligence.
Premiums for the 25 to 49 year old age group have risen by 3 per cent to £699 in the past year and by 3.6 per cent for the over 50's to £407, according to The Daily Mail.
Although younger drivers are seeing price cuts with premiums falling 3.2 per cent in the past year, they pay higher than other age groups at £1,673 on average.
Overall premiums have increased by an average of 22.6 per cent since October 2013 when Consumer Intelligence first started collecting data with prices rising by an average of 0.7 per cent in the past three months alone.
This is still 10.1 per cent off the peak pricing of September 2017 but prices are once more on an upward trajectory.
Consumer Intelligence calculated the premiums by comparing the prices offered for 3,600 people, weighted for age groups and regions by all the major price comparison websites and the key direct insurers.
The top five prices for each category of driver are compared to the previous month's top five and the variations are averaged to the produce the index.
One of the reasons insurers are beginning to ramp up car insurance premiums is as a result of recent changes to the Ogden discount rate.
The Ogden rate – or Personal Injury Discount rate – is used to calculate how much insurers pay as compensation to people who suffer life-changing injuries. The lower the rate the higher the compensation paid.
In August, the rate was changed from -0.75 per cent to -0.25 per cent. Whilst this might seem like a modest change, any movement of the Ogden rate has a significant impact on insurance.
The new -0.25 per cent rate equates to higher than anticipated compensation payouts for accident victims.
Adding to the issue, many insurers had already priced in a 0 per cent to 1 per cent move.
However, some insurers have actually benefited from the Ogden change as they've based their pricing on the old -0.75 per cent rate meaning they could be in a position to offer premium reductions going forward.
John Blevins, pricing expert at Consumer Intelligence, said: 'Pricing at an overall level will be driven by claims experience and the impact of the Ogden discount rate.
'Many insurers feel misled by the government and had planned for a more favourable discount rate being set. As such, premiums are being adjusted to compensate for the cash injections on to claims reserves made by many insurers.'
|Region||Price change seen over the
last 12 months
(Sep 2018 Sep 2019)
|Price Index for the last 3 months
(June 2019 Sep 2019)
|Yorks & The Humber||-0.40%||0.60%||£847|
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Last year 65% of customers didn't switch their car insurance to try and get a better deal.