Car insurance costs fall at record rate thanks to lockdown
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Between January and the end of March, the average premium paid fell by £32 to £436. That was a seven per cent drop on the last quarter of 2020 and represents the sharpest fall since the Association of British Insurers (ABI) began collecting data in 2012.
The figures from the ABI also show that premiums are now at their lowest level for almost five years.
The ABI said that lockdown had brought savings for insurers as the number of claims fell and they were now passing some of those saving on to customers.
It also said that the lockdown’s effect on driving tests had contributed to the fall. Hundreds of thousands of tests were cancelled, meaning fewer young drivers, who pay the highest premiums, took to the road. That has helped bring down the national average cost.
Laura Hughes, ABI’s manager of general insurance, said: “While the national lockdown during the period may have led to fewer road journeys, it is good to see that during the first quarter of the year motorists continued to get the best deals from a competitive motor insurance market. The next few months will see significant developments in the motor market, as we cautiously emerge from the pandemic, returning to more usual driving patterns, and with the introduction, at the end of May, of the official injury claims portal that will simplify the whiplash claims process, while ensuring proportionate compensation for genuine claimants.
“And while underlying cost pressures around rising repair bills will remain, the market will stay competitive, enabling motorists to shop around for the best deal for their needs.”
Dan Hutson, head of motor insurance at comparethemarket.com, said that while the latest fall was welcome news for drivers it might not last as driving patterns return to normal.
He said: “As the lockdown restrictions and travel curbs are lifted, the number of cars on the road will increase. This is likely to result in more car insurance claims which could mean a subsequent rise in annual premiums. Our data shows the decline in the cost of car insurance slowed at the start of spring after falling rapidly in the winter months. Average premiums even began to increase slightly in some areas including the West Midlands, East Anglia and Northern Ireland in March, compared to the previous month.”