UK Car Insurance Premiums Drop 1% In Third Quarter: Survey




As noted in October 2019, the cost of a comprehensive motor insurance policy in Britain fell 1% in the third quarter, pushed down by uncertainty from the personal injury discount rate change in July and the market watchdog’s interim report on general insurance pricing practices, a survey showed.


The average premium for a comprehensive policy is now 783 pounds, according to the latest index from price comparison site Confused.com, compiled by insurance advisory company Willis Towers Watson Plc (WLTW.O).

Britain’s market watchdog said last week car and home insurers could avoid mandatory pricing restrictions if they voluntarily stop penalizing loyal customers.

Firms use complex pricing practices that allow them to raise prices for consumers that renew with them year-on-year, known as “price walking”, the Financial Conduct Authority (FCA) said.
Prices in 2018 were also pushed down by changes in the Ogden rate used to calculate compensation for personal injuries and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries.

Whiplash is a form of neck injury caused by a sudden jolt that snaps the head backwards but insurers argue that many claims in such cases are fraudulent.

Quarterly data by price comparison website MoneySuperMarket (MONY.L) showed that an average fully comprehensive premium now stands at 459 pounds, 5% lower than last year.

Companies such as Admiral, RSA Insurance Group Plc (RSA.L), Direct Line Insurance Group Plc (DLGD.L) and Hastings Group Holdings Plc (HSTG.L) provide motor insurance for Britain’s highly competitive insurance sector.

“We still consider the UK motor insurance market to be efficient in the medium-term, and expect a faster price pick-up in the coming months. Regulatory scrutiny with respect to profitable back-books may act as a catalyst for new business pricing,” Barclays analysts said.

“The FCA has discussed measures to encourage fairer pricing for new and returning customers, so we expect to see insurers adjusting their prices. This could see prices for new customers increasing as they offset fairer premiums for renewing customers,” Wright said.

Source: Reuters.com

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