Car insurance costs are rising at five times the rate of inflation, according to the latest industry data.
The average premium now stands at £755, with the weak pound and increased complexity and cost of repairs being blamed for the 14.6 per cent rise over the last 12 months. That compares with the 2.9 per cent inflation rate.
Young drivers are still paying the most, with an average premium of £1,719 for those under 25 but, their rates rose more slowly than average (11 per cent), in part thanks to the increasing adoption of “black box” policies. Two thirds of the most competitive policies for under-25s are now telematics-based, where driver behaviour is tracked to help tailor prices.
Those over 50 years old saw the steepest increases – up 16.5 per cent – but their bills remain the lowest, at £434.
The data from industry observers Consumer Intelligence also showed that drivers in London and England’s north-west continue to face the highest bills with premiums in excess of £1,000. Drivers in Wales and Scotland enjoy the lowest average bills, at £573 and £518 respectively
The data also shows that the rate of increase has slowed in the last three months, although uncertainty over a number of factors has thrown doubt on how bills will be affected.
John Blevins, Consumer Intelligence’s pricing expert said: “Prices are stabilising but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another Insurance Premium Tax rise in the Budget.
“Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars which cost more to repair, but also because the weakness of the pound means the cost of parts is rising.
“Older drivers are being hit with higher premiums because they are driving for longer and consequently becoming involved in more accidents.”
Increasing premiums by region
|REGION||AVERAGE PREMIUM (FIVE CHEAPEST)||PRICE RISE IN YEAR TO MAY|
|Yorkshire & The Humber||£690||15.7%|