The £14 reduction in 2018 might not sound much, but it's the biggest drop in four years.
The average annual car insurance premium fell for the third quarter in a row between July and September, according to new figures.
Data from the Association of British Insurers (ABI) shows that the average premium has dropped to £471 - a one-percent reduction on the previous quarter’s average of £477.
Over the course of 2018 so far, the average cost of a fully comprehensive policy has fallen three percent - or £14.
That might not sound like much, but the ABI says such a reduction hasn’t been seen in the motor insurance sector since 2014.
According to the organisation, which represents more than 250 insurers, the reductions are most likely linked to the government’s ongoing implementation of the new Civil Liability Bill.
The proposed legislation will see a change in the way whiplash-style injury compensation is calculated, with payouts expected to become fairer and cheaper for insurers once the laws are passed.
However, the ABI is also attributing the current pricing to the Insurance Premium Tax rate, which currently stands at 10 percent.
The organisation had feared a rise in the tax as part of the Chancellor’s Budget, but such concerns turned out to be unfounded.
Huw Evans, the director general of the ABI, expressed his pleasure at the Chancellor’s decision, saying any increase would have encouraged people not to insure their property.
“We are pleased that the Chancellor has done the right thing by not increasing Insurance Premium Tax,” he said. “IPT already brings in more than £6 billion a year for the government and it would have sent out completely the wrong message to increase costs any further for people who do the right thing by buying cover to protect themselves, their properties and their families.”
But the ABI has warned that the continued reductions in insurance costs can only be maintained if the government’s work on the Civil Liability Bill goes through and if Insurance Premium Tax continues to be frozen.
Rob Cummings, head of motor & liability at the ABI, said: “Motor premiums dropping for a third consecutive quarter is great news for motorists, but lower insurance costs will only last if the government implements their personal injury compensation reforms in full and leaves Insurance Premium Tax alone.
“Insurers are committed to passing on cost benefits of the reforms to consumers – it is now down to Parliament pass the much needed reforms within the Civil Liability Bill in full and for the government to increase the Small Claims Track limit to £5,000.”