Pound’s Brexit plunge pushes car insurance premiums higher for first time since early 2017
- Average price for comprehensive policy rose by 2.7% to £609.93 in the last quarter of 2018 from the previous quarter
- Prices on the rise also because of complexity of modern cars and delay in introduction of Civil Liability Bill
- The biggest increase was seen by drivers in their sixties, who watched their comprehensive premium rise by 5.4% to an average £384.42
Car insurance premiums are rising for the first time since early 2017 as the Brexit-induced plunge in the pound’s value is making vehicle repairs more expensive, new data show.
The average price for a comprehensive car insurance policy rose by 2.7 per cent to £609.93 in the last quarter of 2018, according to the AA.
The motoring association said that prices are again on the rise also because modern cars are more complex – hence more expensive to repair – and due to a delay to an expected cut in claims that now won’t take effect until Aprl next year.
On the rise again: Car insurance costs are back on the rise following a period of falls
But Janet Connor, director of AA Insurance, said that underlying all of this are concerns surrounding Brexit.
‘Regardless of what the final deal looks like, the market has continued to battle with the value of sterling’ she said.
‘This has led to the rising cost of imported car parts to the motor repair industry, which ultimately finds its way to the premiums we pay.’
The increase in premiums seen at the end of last year is the first since the second quarter of 2017, when it hit a record high of £690 to then start declining steadily.
Prices in 2018 were pushed down by changes in the Ogden rate, used to calculate compensation for personal injuries, and the Civil Liability bill, which was passed in October and reduces claims for whiplash injuries.
But the Civil Liability Bill – which means drivers will get a smaller payout for road traffic accidents and accidents will have to be more serious than it would be now for drivers to be able to recover any legal costs – won’t now take effect until April 2020.
The rise in premiums in the last three months of 2018 is the first since second quarter of 2017
The AA said this delay means insurers have started hiking the price of car cover as the expected reduction in costs is not materialising until next year.
‘Although the Civil Liability Act has passed into law, delaying the new provisions until April 2020 has meant that recent premium reductions in expectation of claims cost savings along with the upward adjustment of the discount rate were premature,’ Connor added.
Young drivers pay the highest price, with premiums averaging £1,317 for 17 to 22 year olds, having gone up by 2.1 per cent compared to the previous three months.
But the biggest increase was seen by drivers in their sixties, who watched their comprehensive premium rise by 5.4 per cent to an average £384.42.
Car insurance by age groups: The biggest increase was seen by drivers in their sixties
Connor continued: ‘Young and newly qualified drivers face a significant penalty when it comes to insurance pricing, not least because they have not built up a no claim bonus.’
Elderly people aged 70 or over – like Prince Philip, who was involved in a car crash on Thursday – pay a much lower price than young drivers, with premiums averaging £540. That’s after an increase of 3.8 per cent, according to the AA.
Tom Flack, editor-in-chief at MoneySuperMarket, said: ‘Prices can be lower for 65+ as they often drive fewer miles. Insurers will still cover drivers in their 90s, but the message is to shop around because it’s not as easy to get cover as when you’re in your 60s.’
SAVE MONEY ON MOTORING