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Insurance premiums cut to a five year low

Insurance policy

Car insurance premiums have dropped to a five year low according to the latest price index from confused.com.

The research, which was produced with the help of professional services firm, Towers Watson has revealed that over the first quarter of 2014, average comprehensive premiums have dipped below £600 for the first time since 2009 in what the insurance sector are heralding as a success brought on by the whiplash reforms.

It is now expected that the insurers will use the evidence, which shows that prices have been reduced by 7.5% over the last quarter and 19% over the course of the year to bring about further reforms for the whiplash claim process and more worryingly for the personal injury industry – the raising of the small claims limit.

But Stephen Jones, who is the UK head of pricing at Towers Watson has said that it is not just the reforms that are having an impact and that changes to the legal profession itself is also having a huge impact.

He said: “Contributing factors could include optimism surrounding potential reforms in the medical assessment of whiplash and action which may be taken on third-party repair and hire costs.

“Another factor to consider is that some insurers declared increased reserve releases when announcing their year-end results, perhaps indicating growing confidence in their understanding of the claims cost impact of recent legislation changes including LASPO.”

Although insurers will obviously be optimistic in regards to future whiplash reform plans, there is also an air of concern regarding the revelations as questions about the sustainability of premium drops are raised.

Head of car insurance at confused.com, Gemma Stanbury urged motorists to continue to shop around when it came to looking for insurance saying: “We would recommend that drivers shop around on comparison sites like confused.com while prices are at their lowest to find the best deal for them.

“Motorists have a great opportunity to take advantage of these latest price drops – we’re urging consumers not to just accept their renewal price as their current insurer may no longer be the cheapest option for them.”

The report showed that the benefits of falling premium prices have been most notable for younger drivers with the average premium for a 17 year old falling by almost 39% in the last year.

Older drivers have also reaped the rewards as the premium price for a driver who is 50+ has dropped on average around 20%.

In terms of region, the research shows that it is in fact the areas that traditionally have the highest volume of claims that have seen the biggest decrease in premiums, with Merseyside and Manchester enjoying a 23% decrease with premiums falling by £248 on average.

All eyes will now be on the government response to the news and whether or not they can resist the growing clamour from the insurers, to make further changes and cuts to the industry.

What they must bear in mind is that whiplash accidents do still occur and the genuine accident victim should still be taken under consideration. The last thing that needs to happen is further radical changes that will all but strip the genuine claimant of their right to claim access to justice.

The Justice Secretary, Chris Grayling’s latest stance on whiplash reform that enough had been done for the time being and that more focus would be put on developing the medical panels that will improve the way a claim process works. It will be interesting to see if this remains the case after these revelations.

Image source(s)

1. Flickr; Pictures of Money; https://www.flickr.com/photos/pictures-of-money/17121703798

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