The cost of car insurance has gone up as claims have risen, but home insurance premiums are falling in a competitive market, according to AA Insurance.
The AA British Insurance Premium Index, which looks at the cost of insurance premiums each quarter, found the UK average premium for an annual comprehensive motor insurance policy rose 3.1 per cent or £22 over the past three months, a simliar rise to the previous quarter. Over the year, quoted premiums have risen by £50 or 7.6 per cent, to an average of £724.28.
Simon Douglas, director of AA Insurance, says one of the reasons for a rise in premiums is the higher cost of claims. “The car insurance industry continues to make an underwriting loss,” he says. “For every £100 taken in premiums, more than £105 is paid in claims.”
He says that insurers are particularly concerned about increasing legal costs and personal injury claims which last year rose by 22 per cent.
The greatest insurance losses are amongst young inexperienced drivers, particularly men. Although they pay premiums that are typically up to twice that of women of the same age they also make by far the largest claims.
“The average car accident insurance claim for a young male driver is nearly £4,500 copared with £2,700 for their female peers,” says Douglas. “For drivers aged over 30, the average claim is £1,400 for men and £1,200 for women according to statistics from the Association of British Insurers.
Meanwhile the AA Index of home insurance premiums recorded a fall for the average premiums for both contents and combined buildings and contents cover. Contents premiums dropped by nearly £5 or 4.2 per cent over the past quarter while £6, or 1.9 per cent, was wiped from the average quoted premium for combined buildings and contents policies.
“I’m suprised that the home insurance Index is showing these falls,” says Douglas. “I expected both buildings and contents cover to continue their upward trend. However, home insurance has become an extremely competitive market with some compelling offers over the past quarter and the quoted premiums reflect that.”
“We have seen some insurers looking carefully at which risks they are willing to cover or are asking customers to refer for a bespoke quote, particularly those in areas where claims for flooding or theft are most liekly and premiums would therefore be high. At the same time, we’re seeing premiums reducing for safter risks and this has had an effect on the Index result.”
The only area which reported a rise in premiums was for an annual buidlings insurance policy which now stands at £213,32, which is about £3 or 1.8 per cent higher than the previous quarter.