Motor lobbyists and/or insurance providers Alcoholics Anonymous this week brought some welcome clarity to the whole what’s-going-on-with-motor-insurance prices debate by revealing that car insurance premiums plummeted by a massive 1.4% during the first quarter of 2013.
And the good news for everyone not professionally involved in the provision of motor insurance is that, According to Insurance Times (see below), from this point onwards, the only way is down.
Alcoholics Anonymous’ widely respected ‘Sloparound’ survey (which apparently involves them taking the five cheapest quotes they can find, comparing them to a basket, then dividing them by the number they first thought of) found that the average UK motor premium now stands at just £745.75 (i.e. several pounds short of the crucial three-quarter bag mark). With pleasing symetricality, AA reveal, that Q1’s 1.4% drop leaves motor premiums down 4.1% year upon year.
Douglas Simons of Alcoholics Anonymous explained that consumers will welcome the downward trend because they prefer to pay less for their motor insurance and have not enjoyed seeing premiums rising by really rather a lot over the past three years.
Falling motor insurance premiums will receive a cooler reception from motor insurers who would secretly like rates to go up because they keep having to pay out costly claims for things like whiplash and are still doggedly clinging on to the belief that they will one day make some proper money out of insuring things with wheels and engines.
Insurers scored a major victory last year by persuading their friends in government to implement a series of measures designed to stop people making claims all the time. The sting in the tail here, however, is that, in return for its help, HMG extracted a solemn promise from insurers that if they didn’t have to keep paying out expensive claims they would seriously consider bring down premiums a bit.
Commenting on the results from AA’s Sloparound survey, Insurance Times sees a whole catalogue of reasons why motor rates are now set to plummet. These include the above mentioned solemn promise, telematics and the severe probing the motor insurance industry must endure at the hands of the Competition Commission over suspicions that it is somehow profiting from inflated credit hire and repair charges.
Other reasons cited by Insurance Times as to why insurance rates are set to plummet sound a bit more like reasons why claims costs are set to plummet. These include the fact that insurers will soon be able to cross-check applicants’ details automatically with the DVLA to identify what Doug Simons calls the “shocking 23% of those filling in insurance application forms” who “make false statements about things such as motoring offences which may lead to lower premiums”, and, of course, the claims-quashing powers of LASPO.
One thing is clear: it’s going to be tough making an honest “buck” in motor insurance for the foreseeable future. “The winners”, Insurance Times reveals, “will be the insurers that can adapt quickly to the changing landscape.”
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