Young drivers stung as average cost of car insurance reaches £971
Thursday, 19 January 2012 11:58
The cost of car insurance continued to rise in 2011 but by a slower rate than in 2010.
The AA today released its benchmark Insurance Premium Index which showed that the average car insurance premium now costs £971, an increase of 15.3 per cent from 2010, including an increase of 5.4 per cent in the last quarter of 2011.
The cost of car insurance increased by almost 40 per cent in 2010. The main causes of this were insurance companies trying to recoup revenue lost as a result of older drivers 'fronting' policies for their children, insurance fraud and the cost to the industry of uninsured drivers.
The AA used a shoparound index which is an average of the three cheapest quotes from a range of insurers, brokers and schemes.
Young female drivers are likely to see the cost of car insurance rise sharply next time they renew their policy due to a new EU ruling.
Young drivers continue to suffer both the highest premiums with men paying the most. The average cost for a 17-22 year old male for one year’s car insurance is £3,163, an increase of 15 per cent. The equivalent cost for a female of the same age is £1,799.
Recent figures from the Department of Transport show that male drivers under 24 are responsible for 28 per cent of all deaths or serious injuries on UK roads.
However, a ruling by the European Court of Justice that insurers can no longer discriminate between sexes when setting premiums that will take effect from December 2012 will mean the discrepancy is reduced.
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Simon Douglas, director of AA Insurance said: “Young women will see the biggest premium increases. It is unknown territory for insurers who will be careful to avoid significant losses they can ill afford.”
The main reason for the continuing rise in car insurance premiums is the high numbers of personal injury claims, a continued trend that was highlighted in a recent parliamentary Transport committee report.
Simon Douglas said: “I expected a much smaller rise, especially following the small fall in premiums during the third quarter of 2011.
“The difference shows that the cheaper deals are disappearing. Young drivers seem to be the biggest losers with a higher than average increase for them. It’s clear that young drivers continue to be of concern to insurers, while many no longer offer cover to those under 21.”
The AA expects car insurance premiums to continue to rise above inflation in 2012.
Mr Douglas says: “Reform of the way that personal injury claims are managed can’t come soon enough. It is wrong that injury claims are rising while the number of accidents on Britain’s roads is falling.”
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Read more: How much will car insurance premiums rise by in 2011?
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