5th October 2015
Research has shown that that car insurance premiums have risen by 4.6% in the past year, however under-25s saw the best deals available to them fall by 5.5%.
According to the data compiled by Consumer Intelligence, the over-50s age group have seen the highest average increase in their car insurance premiums - at 8.6%, whereas the 25-49 age group saw a 7.4% increase.
The best deals from a number of different distribution were compared as part of the study, including price comparrison websites and going direct to insurance companies. They will later be reflected in official inflation statistics.
Due to long-standing statistical evidence that younger motorists are more likely to be involved in costly collisions, insurers have traditionally loaded the insurance premiums for young drivers to cover the cost of claims.
However, this trend appears to be easing since the introduction of ‘black-box’ insurance, where the insurer fits a telematic recording device to the vehicle and adjusts premiums in line with the driver’s behaviour.
The main factors monitored by insurers are the times of day or night that the vehicle is used, the speeds travelled at and how harshly the driver brakes and corners. This provides insurers with more detailed information by which to underwrite their policies.
The main benefit to consumers is that they are charged a premium that more accurately and fairly reflects the risk they pose to the insurer, with more sensible drivers rewarded with lower premiums.
Although those youngsters with poor driving habits will end up paying more, this shift has meant that the best advertised deals for younger drivers fall significantly. According to Consumer Intelligence 46% of the most competitve quotes come from telematics providers, compared to 32.5% in October of last year.
Looking back over the past two years, advertised prices have actually fallen by a staggering 20.6% for the under-25 age group, whereas the over-50s have seen a 13% rise and the 25-49 year old age group have seen a 6.7% rise.
The chart below shows average premiums by age in 2014 and illustrates how average premiums rise significantly as drivers reach their early 70s. However, it can be assumed that this is due to a significant increase in the average cost of claims involving this demographic.
Average Motor Insurance Premiums and Claim Values by driver age (2014):
Premiums are still substantially lower than those for young drivers and the reason for this is claims frequency, as illustrated in green on the graph below:
Year on year premium price falls for the under-25s peaked in May when the cost had fallen 10.3% in 12 months.
According to the reasearch 22% of young make drivers and 14% of young female drivers now use telematics or black box insurance policies, which reward safer driving habits.
Younger drivers are still paying the higher avarage premiums however; the average cheapest premium for all motorists in August 2015 was £696, but for motorists aged under 25 it was £1,680. Drivers aged 25-49 paid £481 and those aged 50-plus paid £258.
Chief executive of Consumer Intelligence, Ian Hughes said: “Older drivers are to an extent helping to fund the premium reductions for younger motorists and need to ensure they are receiving the best value for money from their insurer.”
Would you consider a telematics insurance policy? Maybe you’ve saved money by chosing the black box route – either way we’d love to hear your comments:
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