Simon Douglas, Director of AA insurance brought attention to the turmoil in today’s car insurance market. The insurance industry expert spoke out against insurance providers hiking their prices, while other companies are actively slashing their premiums in a bid to gain customers.
The AA instigated a study which highlighted a discrepancy between premiums for consumers who purchase directly from insurance providers, and those who go through price comparison websites.
According to the AA index, the average price of the five cheapest fully comprehensive policy premiums, when sold directly, has now risen by a staggering 8.5% in the last 12 months. This brings the average price to £1,034 for 12 months cover.
The same study also drew attention to the fact that the cheapest quote available on popular price comparison sites for the same person, with the same risk, wanting the same cover had actually fallen by 3.3%. Bringing the cost to just £631.
Young male drivers punished the most
Young men are suffering the most. In the second quarter of 2012, 17 to 22 year old men saw average prices tally up to an eye watering £2,792. Conversely, while women also experienced an increase in the last 12 months, their premium prices rose to an average of £1,995.
Although, in some cases, competition is leading to insurance providers slashing their premiums to attract customers, cheap cover could be a false economy. Douglas warned that consumers “need to make sure they’re getting good cover, not just a good price”.
Claims culture not helping
The AA study also found that car insurance companies were also making a concerted effort to address the issue of fraudulent claims. Bogus whiplash and cash-for-cash claims have been contributing to insurance premium hikes. Car insurance providers are also hot on the heels of application fraudsters. A number of consumers intentionally alter or withhold information in order to save money by reducing their premiums. This is also having a negative impact upon premium costs.
The DVLA are planning to co-operate with car insurance companies by granting routine access to their database. This means that insurance providers will be able to cross-reference more accurately. This will go a long way in clamping down on insurance scams.
But which region benefits from the lowest prices when it comes to car insurance premiums? Scotland remains the cheapest, with the average quote coming in at £727. Consumers in Liverpool and Greater Manchester regions are feeling the pinch however. Their localities are the most expensive in the UK, with premiums averaging £1,648.
So, short of moving to Scotland, is there anything consumers can do to reduce their premiums and save money? There is some good news for men, who are currently paying more than women. This good news is, however, applicable for a limited time only! At present, men of all ages can benefit by adding their wife to their car insurance policy.
On average, men between the ages of 21 to 25 can actively reduce their car insurance premiums by up to 29% if they add a spouse to their policy. Their spouse must be driving regularly for this to apply however.
Once the EU Gender Directive, 21 December 2012 comes into force, the days of insurance providers factoring gender into premium calculations will be over. Men will have to act quickly if they want to slash their insurance premiums by adding their spouse.
All in all, reducing your premium costs still remains a question of shopping around and keeping an eye on developments within the car insurance industry that could benefit the consumer.