The Association of British Insurers (ABI) has published it’s latest data on motor insurance premium trends.
In a somewhat contrasting view from that of a recent study by Consumer Intelligence, where their findings reported that premiums were ramping-up, the ABI reports that motor premiums for the third quarter of 2019 have remained “fairly steady with no significant changes”. Indeed they observed just a £1 reduction in the average premium as it falls to £468 from £469 where it stood in Q2 2019. Taking a longer term trend view, motor premiums continue to decrease, from a peak in the average premium in Q4 2017 of £496 to this quarter’s £468, representing a 5% fall.
The ABI adds that this quarter also saw continued growth of the market, as both Gross Written Premium and the number of policies written have both seen a steady 3% increase, which is on part due to a spike in new car registrations in September.
July 2019 saw the announcement of a change in the Ogden discount rate in England and Wales from -0.75% to -0.25%, and more recently we have seen the announcement of a new PIDR in Scotland, both of which impact on motor premium.
Citing the uncertain impact of Brexit on the strength of the pound and the likely impact on the cost of vehicle repair, the ABI says it’s difficult to predict what the overall trend will look like over the next twelve-months. However, the final quarter of the year traditionally sees a small increase in average premium due to the volume of motor business written falling significantly, so we should not be surprised if this is repeated in three months’ time.
Commenting on the above, Mark Shepherd, ABI’s Assistant Director, Head of General Insurance Policy, said:
“Motorists continue to get competitively priced motor insurance deals, but cost pressures remain. This summer’s Discount Rate change will do nothing but add to the cost pressures already being felt by insurers from more expensive vehicle repairs and theft claims. This makes it more important than ever that the whiplash reforms in the Civil Liability Act are implemented on time and in full. Now is also the right time to consider reducing the rate of Insurance Premium Tax, which has doubled to 12% over the last four years.”