Car insurance prices 'falling at record rate'

Cars 'No-win, no-fee' cases are now more expensive to pursue

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The cost of car insurance is falling at a record rate in the UK, according to the insurance arm of the AA.

The average annual comprehensive car insurance quote fell to £594.84 this month, it said, down 9.8% from £659.53 last July - the biggest decrease since the AA insurance index began in 1994.

It said the dip was thanks, in part, to clampdowns on fraud and restrictions on claims management companies.

Despite the fall, premiums remain much higher than they were six years ago.

Third party, fire and theft quotes also fell between July 2012 and this month - down 4.8% to £820.58 on average, AA Insurance's research suggested.

BBC business correspondent Joe Lynam said the 9.8% fall in comprehensive cover quotes follows a 6.4% fall over the course of 2012 - itself a record.

But he adds that the cost of insuring the average car is still twice as much as it was in 2007.

Gender equality

At the start of April, a ban on referral fees was introduced.

Insurance premiums are far higher than they were in 2007

They were paid by lawyers and claims management firms to breakdown firms, brokers and the insurers themselves, in exchange for providing information about accident victims.

Also, anyone suing for accident damages with the help of a no-win, no-fee lawyer - known as a conditional fee arrangement - now has to pay their lawyer's success fee from their own funds if they win their case.

It was previously added to the bill of the losing party.

This has made claims more expensive to pursue.

And new gender equality laws have lowered premiums of men by far more than expected while women's premiums have remained static, according to AA Insurance's research.

Fraudulent claims - especially for whiplash which is often difficult to disprove - are also down.

AA Insurance director Simon Douglas said insurers previously faced "a fast-widening gap between premium income and claims costs - largely driven by whiplash injury claims and fraud, which saw very sharp premium increases between 2009 and 2011".

"That gap is closing and premiums are falling again thanks to competition, as well as improved fraud detection by the insurance industry and tightening of the law that is beginning to curb the number of spurious new whiplash injury claims," he said.

'Treated unfairly'

"The news that hundreds of rogue 'no-win no-fee' claims firms have been reined in is welcome and, in part, falling insurance premiums reflect that."

Graeme Trudgill of the British Insurance Brokers' Association said uninsured driving costs the industry £500m, whiplash claims £2bn and fraud £1bn.

But these costs were now coming down, he added, because of a concerted effort by the industry, with "discounts now feeding through to policy holders".

Justice minister Helen Grant said: "We are turning the tide on the compensation culture which has pushed up the cost of insurance for drivers, schools and business - and taking another important step to reducing the cost of living for ordinary people."

Earlier this month, City regulator the Financial Conduct Authority launched an investigation into insurance companies for overcharging customers when they renew their car and house policies.

The FCA says automatic renewal can lead to customers being treated unfairly.

BBC Radio 4's Money Box revealed in March that loyal customers often pay much more than new ones for insurance.

The insurance industry says consumers can shop around for the best prices in a competitive market.


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  • rate this

    Comment number 464.

    Just seen the report on BBC News at 9 45. Joe Lynam was driving, talking to the camera and was wearing his seatbelt under his armpit. Shocking attitude. What does BBC News Editor have to say ?

  • rate this

    Comment number 463.

    Fraud compensation claims seem to knock those persons who have had a genuine case of whiplash injury.

    I was hit from behind while stationary at a red traffic light by a lorry.
    The impact caused mechanical failure of the seats - I no longer had a boot.
    At first I was OK but 3 hours later I got a very severe headache and neck pain that lasted three months.

    Genuine whiplash is a serious matter.

  • rate this

    Comment number 462.

    @372 Many private companies go under too. If you hate the nanny state so much why don't you hate the police, lawyers and judges who protect your private property rights? Democratic socialism has yet to be tried. Authoritarian socialism failed and capitalism will always be corrupt to its evil core.

  • rate this

    Comment number 461.

    As for young drivers, no wonder many don't bother with insurance when they get quoted circa £20,000 (yes, 20 grand) for a year

  • rate this

    Comment number 460.

    49 years of age a landrover that does nought to 60 in 2 days :-) >10 years no claims the best imobilizer system in Europe and my Insurance company ,well not any more ,tried to hit me for £800 admittedly a higher level of breakdown cover included and they report the prices are coming down aye right !!!

  • Comment number 459.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 458.

    Some of these comments are astounding. I've just got renewal quotes £100-200 higher than my last years insurance. I have a clean record for the last 12 years and although my Wife was injured in an accident 2 yrs ago, she was not at fault.
    The drivers are captive customers and the insurers are still ripping us off. I don't believe the propaganda fed to us from the insurers.

  • rate this

    Comment number 457.

    on this report tonight the reporter Joe Lynham was wearing his belt incorrectly and it would have invalidated his insurance if he had had an accident.........a bit dim!

  • rate this

    Comment number 456.

    453. David - "try getting insurance for a 17/18 year old. Blocking them from the job market with huge prices worth more than the car..."

    Yes but its not about the price of the car, its about the FACT that an old cheap car is just as capable of killing the 17/18 yr old or his friend or somebody else - & in a 17/18 yr old's hands they sadly frequently do!

  • rate this

    Comment number 455.

    Why not try Adrian Flux.. they have a policy of not returning your premium if you cancel your policy ... and find it amussing.

  • rate this

    Comment number 454.

    What happened to the investigation into repair cost escalation and selling of names and details. When that sees the light of day they may be some changes.

  • rate this

    Comment number 453.

    try getting insurance for a 17/18 year old. Blocking them from the job market with huge prices worth more than the car. OFT move in on this!

  • rate this

    Comment number 452.

    The fact that this can happen proves how un regulated the industry is.

  • rate this

    Comment number 451.

    It is time to ban the parasitic lawyers. lawyers.
    I had a very minor glancing contact with a car driven by a woman who turned a corner me without indicating. As I had moved forward about a foot, it was deemed to be my fault and the claim for whiplash and backache was made and paid out despite photographs showing no physical damage to my car.
    Honest lawyers? I think not.

  • rate this

    Comment number 450.

    re 103. Great idea!
    I'm now looking forward to a big holiday on the refunds from the licence fee for all the programmes I haven't watched, parking tickets where I have left before time, any pints I haven't finished after last orders, unused mobile minutes and broadband download allowances, and all those standing charges which appear to do nothing more than line company pockets. Numpty!!

  • rate this

    Comment number 449.

    It is estimated that there is 250,000 drivers with fake insurance documents that many have simply sourced online.

  • rate this

    Comment number 448.

    I would tell you what I pay age 61, clean licence, no claims for 20 years or so but it would be tempting fate. I would need to be touching a large piece of Anglesey hardwood cut from a sacred grove before taking a stupid chance like that.

  • rate this

    Comment number 447.

    Prices may have fallen a few percent but the fact remains that insurance is still a substantial rip off in most cases. They try their hardest to wangle a few extra pounds out of everyone and to not pay out when they have to.

    It's the same as everything essential in this country; it costs double what it should. Insurance, fuel, VED, rent, council tax, utilities etc. etc. are ALL extortionate.

  • rate this

    Comment number 446.

    And Troll of the month goes to E Doyle. I don't think I have ever seen so many people falling for the obvious wind up.
    Sorry if I am wrong and he isn't a troll, but the alternative is probably worse.
    The comment suggesting that insurers refund 95% of the premium for a claim free year was truly hilarious. They are running businesses not charities, I think their shareholders may be a little upset!

  • rate this

    Comment number 445.

    If I remember rightly the NZ system allows visitors to claim for losses as long as you are still in the country and not once you have returned home. However, it was 8 years ago and it's a distant memory now.


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