The cost of a comprehensive motor insurance policy in Britain fell 1% in the third quarter, pushed down by uncertainty from the personal injury discount rate change in July and the market watchdog’s interim report on general insurance pricing practices, a survey showed.
The average premium for a comprehensive policy is now GBP783, according to the latest index from price comparison site Confused.com, compiled by Willis Towers Watson.
Britain’s market watchdog said last week that car and home insurers could avoid mandatory pricing restrictions if they voluntarily stop penalising loyal customers.
The Financial Conduct Authority (FCA) said firms use complex pricing practices that allow them to raise prices for consumers that renew with them year on year, known as ‘price walking’.
Prices in 2018 were also pushed down by changes in the Ogden rate used to calculate compensation for personal injuries and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries.
Whiplash is a form of neck injury caused by a sudden jolt that snaps the head backwards, but insurers argue that many claims in such cases are fraudulent.
The index, based on enquiries submitted to insurer Admiral Group’s Confused.com, found that the fluctuations in premium levels in recent quarters reflects significant uncertainty in the industry caused by the Ogden rate change and the FCA’s report.
Besides those two factors, the industry is still grappling with inflation challenges and uncertainty around the impact of the Civil Liability Bill, said Willis Towers Watson UK lead of P&C personal lines pricing Graham Wright.
Companies such as Admiral, RSA Insurance, esure, Direct Line Insurance and Hastings provide motor insurance for Britain’s highly competitive insurance sector.
“The FCA has discussed measures to encourage fairer pricing for new and returning customers, so we expect to see insurers adjusting their prices. This could see prices for new customers increasing as they offset fairer premiums for renewing customers,” Mr Wright said. A