The average annual fully comprehensive car insurance premium has fallen to a five-year low, according to new figures. Data from the Association of British Insurers (ABI) shows the average premium paid by customers has fallen by around £30 in the past year amid lockdowns and the resulting reduction in traffic.
According to the ABI’s latest Motor Insurance Premium Tracker – a market survey that looks at the price consumers pay for cover, rather than the price they are quoted – the average fully comprehensive premium during the second quarter of 2021 cost £430. That’s a reduction of £6 compared with the previous quarter and a seven-percent drop compared with the same quarter last year.
The figure also means the average car insurance premium has fallen by almost £40 during the first six months of the year. And even more pertinently, that figure is the lowest in more than five years. The last time it fell to that level was during the first quarter of 2016.
The ABI says the reduction in premiums is a result of the national lockdowns, which cut the volume of traffic on UK roads. With fewer cars on the streets, there were fewer accidents, and that resulted in cost savings for insurance companies, which the ABI says are being passed on to customers.
However, the organisation has warned rising repair bills are creating “cost pressures” for insurance companies. As cars get more advanced, they become more expensive to repair after an accident, and that increases the costs for insurers.
Laura Hughes, the ABI’s manager of general insurance, also said the organisation would keep a close eye on reforms to whiplash-style injury compensation, including the new online claims portal launched earlier this year in a bid to simplify the process.
“The fall in the average motor premium clearly shows that millions of drivers continue to benefit from cost savings made by insurers during the lockdowns,” she said. “It will be interesting to see if there is a rise in motor claims as we emerge from the pandemic and road traffic continues to increase.
“We will also be watching closely the impact of the Official Injury Claims portal launched in May which 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.”