Average insurance premiums fell by a record amount during the first three months of 2021, according to new figures. Data from the Association of British Insurers (ABI) shows premiums have dropped to their lowest level since 2016 following a drop of more than £30 over a three-month period.
The ABI’s Insurance Premium Tracker keeps tabs on the price motorists pay for insurance, with results revealed at regular intervals. The figures for the first quarter of 2021 show the average price paid for comprehensive motor insurance was £436 – a reduction of seven percent or £32 compared with the final quarter of 2020.
It was also the biggest quarter-on-quarter drop since the ABI started collecting the data in 2012. As a result, the organisation says the average price of fully comprehensive car insurance is now at its lowest level for almost five years.
According to the ABI, the reduction in prices stems from the cost savings made by insurers during the lockdowns that have covered much of the past year. With lower traffic leading to fewer claims, the UK’s insurance companies have had to pay out less than expected, and those savings are now being passed on to consumers.
The ABI also says the drop in prices is also partly down to a drop in the number of young drivers, with learners prevented from taking their driving tests during the lockdowns. Because young drivers often pay more for their insurance, they usually push the average up.
However, the organisation has confessed that the rising costs of vehicle repairs are putting upward pressure on insurance premiums. With vehicles becoming more complex, insurers are having to pay more to put them right when they have accidents, and that would ordinarily increase premiums.
But Laura Hughes, the ABI’s manager of general insurance, said the market could be affected as lockdowns are eased. That said, she also expressed hope that the new official injury claims portal would see more “proportionate” personal injury claims that could reduce costs for insurers.
“While the national lockdown during the period may have led to fewer road journeys, it is good to see that during the first quarter of the year motorists continued to get the best deals from a competitive motor insurance market,” she said. “The next few months will see significant developments in the motor market, as we cautiously emerge from the pandemic, returning to more usual driving patterns, and with the introduction, at the end of May, of the official injury claims portal that will simplify the whiplash claims process, while ensuring proportionate compensation for genuine claimants.
“And while underlying cost pressures around rising repair bills will remain, the market will stay competitive, enabling motorists to shop around for the best deal for their needs.”