Car Insurance Market Dips

                                                                                         

Car insurance rates for policies bought on the web have dipped for the first time in the last two years. Online comprehensive motor insurance premiums dipped slightly during quarter four in 2007 according the latest Motor Insurance Benchmark from Experian.

Car insurance premiums for the last quarter of 2007 were down slightly making it the first fall in the average price since 2005. The 0.3 per cent drop occurred during October, November and December last year compared to 2007 July, August and September 2007. However, despite this, the year as a whole recorded a 6.3 per cent increase in the average online price compared to 2006.

Over the second half of 2007, the average broker premium increased at a slightly faster rate than online motor insurance premiums. Although online premiums are still higher than in the broker market, the gap is closing fairly quickly.

Avis Easteal, Managing Director of Experian’s Insurance Services division, explains: "With the increased chance of road accidents at this time of the year coupled with the problem of uninsured drivers, the average premium will be affected as we move further into the New Year.

"Furthermore, the true impact of the floods earlier in 2007 is yet to manifest itself fully in insurance premiums. As claims are being settled, we are seeing premiums begin to increase. However, the increase is slow and it is worth bearing in mind that consumers will also be aware of the imminent price increases and will start shopping around for a cheaper quote. With the motor insurance industry being as fiercely competitive as it is, the focus on price will increase and it could affect the speed at which premiums increase."

The average price for third party, fire and theft car insurance during quarter four in 2007 continued to emerge as significantly higher than the average comprehensive premium, mainly because they tend to be related to younger drivers with low or no voluntary excesses. However, motor insurance in the online market for third party, fire and theft for the year as a whole recorded a 2.1 per cent premium reduction compared to 2006.

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