After enormous rises in car insurance premiums over the last year, it appears that premiums have stabilised – but for how long?
At the end of April 2012, the AA’s British Insurance Premium Index recorded a fall over the previous three months, a pattern that contrasts sharply with the overall figures for last year, which saw a 7.7 per cent rise.
Whilst prices continue to rise above the rate of inflation, they have managed to avoid the dramatic increases witnessed for the year ending April 2011, which recorded a phenomenal 40.1 per cent increase. These growths have also been reflected in the increased internet traffic for websites, such as comparethemarket.com, which enable consumers to compare a range of costs and policies in one place.
Mobile phone use to increase premiums
The rises have also been accompanied by a number of new policies that target specific groups of drivers, raising their premiums or, in some cases, disqualifying them from getting insurance at all.
This can be seen in measures introduced to penalise those caught using their mobiles whilst driving. Around 170,000 motorists are caught on their mobiles every year, and insurance companies are looking to clamp down on such drivers by forcing their premiums up by as much as 20 per cent.
This will limit the options for convicted drivers trying to obtain cheap insurance; with some companies taking an even harder line by refusing to insure those with mobile phone related driving offences at all.
The price of youth
Young drivers are increasingly footing higher insurance bills as well, and many are finding themselves unable to fund the costs associated with running a car.
With the cost of insuring a car, for the average motorist under the age of 22, running at around £2,500, it is obvious that young drivers, particularly young males, are at a severe disadvantage.
However, the division in price between male and female drivers is soon to come to an end, as the European Court of Justice recently ruled that discrimination in insurance premiums based upon gender is illegal and immoral.
This means that when the new rules come into effect (in December 2012), young female drivers will face the largest premium increases of any demographic: raising the average cost of insurance premiums for young drivers even further.
Future of motoring
So what does this mean for the future of car insurance premiums? Will the last three months of falling prices continue further into the year or will prices rise once again?
Experts at the AA seem to believe that, while this is not the start of a downward trend in prices, we shouldn’t see a universal sky-high increase in premiums any time soon. Some drivers, such as young females, may experience a drastic increase but the rest of motorists should hopefully see little or no change in their premiums.
Of course, only time will tell how motoring and personal finances will change over coming months but, with an increasing number of pressures facing Brits, it is likely that comparison sites will retain their dominance as the main money-saving tactic.