The average annual car insurance premium in the UK increased by £90 in 2016 to around £666, according to a new research carried out by Consumer Intelligence.
This increase of about 15% was about five times the Consumer Prices Index rate of inflation at 2.9% in May.
According to experts, premiums will increase further as the full impact of 2% hike in the rate of insurance premium tax (IPT)—that came into force in early June and increased from 10% to 12%—is not included in the figures. The IPT increase will also affect the cost to cover homes, cars, health and pet insurance.
“Price rises had been levelling off at the end of last year but are now rising rapidly as the full impact of the discount rate cut [related to personal injury claims] comes into effect,” said John Blevins from Consumer Intelligence.
“With the impact of the latest Insurance Premium Tax rise still to come into effect, drivers need to shop around to limit increases in premiums.”
In this research, Consumer Intelligence compared the prices offered by major price comparison websites and direct insurers to 3,250 people to calculate car insurance premiums.
The study found that motorists in the age group 21- 24 are paying the most on average at £1,202. They however experienced slightly lower annual premium increases at 13.1%. Drivers aged over 50 are paying about £418 for insurance cover, but experienced the biggest increase at 17.9%. The premium rates are typically highest (around £1,000) for motorists in London. In Scotland and the South West of England, the average premium is £474.
The following list details average premiums and increases over the past year across the UK, as per research.
- London, £1,000, 16.7%
- East Midlands, £553, 17.6%
- West Midlands, £748, 13%
- North West, £867, 15.7%
- North East, £646, 18.9%
- Yorkshire and the Humber, £658, 15.7%
- Wales, £539, 14.4%
- Eastern England, £574, 16.5%
- Scotland, £474, 16.6%
- South East, £549, 13.5%
- South West, £474, 15.9%