Car insurance premiums accelerating

The cost of motor insurance hit record levels in 2016, rising at more than five times the rate of inflation, according to the Association of British Insurers.

Increases to insurance premium tax, higher repair costs and rising whiplash claims all conspired to send the average comprehensive policy to £462 in the last quarter of 2016. The average premium over the whole of 2016 was now 9.3% higher than it was the year before

Repair bills for cars that have been in accidents have risen especially because of their increasingly sophisticated electronics, while buying in spare parts is also getting more expensive, due to the weakness of the Pound.

The average repair bill has risen by 32% over the last three years to £1,678, the ABI said.

The ABI’s motor premium tracker, which measures the prices consumers actually pay for their motor cover, showed that in the fourth quarter of 2016 policies rose by 4.9% ,or £22 on the average premium.

RAC Insurance director Mark Godfrey said: “Insurance costs are now listed as a significant concern by 26% of motorists surveyed for the 2016 RAC Report on Motoring, and with fuel prices having increased 17p a litre in the last year, motorists are facing a double whammy of rising costs this year.

“The Government needs to start thinking about how it can incentivise take-up of black box insurance products which reward careful drivers as they could help to reduce insurance costs for new and young motorists and in doing so create a new generation of better, safer drivers.”