Data from the Association of British Insurers (ABI) shows that hardly anyone is safe from the rising cost of car insurance, as nearly all age groups suffered hikes in their premiums.
Only young drivers were spared increases, with the average premium of 18 to 20-year-olds falling by £24 year on year – thanks mainly to telematics policies. However, while the 2.37% drop is a good thing, this age group of drivers pays the highest average annual price overall: an eye-watering £973.
In contrast, the lowest priced car insurance policies were enjoyed by the 66-70 age group, who paid an average of £260. However, the over 50s have seen the greatest rise in average prices – an increase of 12.19% for the 56-60 age bracket.
But that’s not all when it comes to car insurance tales of woe. The ABI figures were calculated before the double whammy of the IPT rise and the Ogden rate reduction, the effects of which are likely to stalk premiums for the foreseeable future.
IPT (insurance premium tax) was increased to 12% in June 2017. It’s been increased before (three times no less), but its meteoric rise in a short space of time is what’s drawn attention to it. Coupled with the government’s tinkering of the Ogden rate – which is a formula that determines how much insurance providers pay out in cases of life-changing injury – car premiums have soared to an average of £800.
The ABI has warned that the full effect of the changes may not be felt until 2018 as annual premiums come up for renewal, meaning consumers are likely to face more increases as insurance providers come to terms with the true impact.
Various groups within the insurance industry have repeatedly called for the government to review the changes made in the Ogden (or discount) rate. As it stands, the changes will cost the NHS £1 billion a year.
This should not be constructed as advice and is guidance only.