22nd July 2015
For the first time in almost three years, car insurance premiums have risen in the three months leading up to the end of June. Unfortunately for consumers the price hikes are set to continue throughout the rest of 2015.
On average premiums rose by 5.2% with drivers aged between 23 to 29 seeing the largest rise at 6.2% in the same period. Typically the cost of a comprehensive motor insurance policy is currently £549.
There are numerous reasons for insurance prices to increase. To understand the rise in costs it’s necessary to know how the insurance market operates. Comprised of hard and soft markets the industry performs a loop between the two. In a hard market competition is low and premiums are relatively high. As competition increases it moves towards a soft market where prices are driven down by increased capacity and reduced underwriting criteria.
Currently we are seeing the transition from a soft to hard market. As insurers try to keep their prices competitive they are chewing further into their reserves which will eventually leave them with no choice but to increase premiums.
Janet Connor of AA insurance has stated “Insurers have been releasing their reserves to maintain their competitive edge to the point where this is no longer sustainable... The days of cheap car insurance premiums are over - price rises are inevitable."
The shift in market comes at a testing time for UK motor insurers as Insurance Premium Tax is set to jump 3.5% in November. It’s clear that the industry doesn’t have enough reserves to lessen the blow for policyholders which could result in an overnight increase of £18 on policy prices.
Call Wiser help you search over 30 of the UK largest insurers to find you the ideal policy at the right price. You can get a quote online or give us a call on 0333 003 3270.
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