• Prices are decreasing among all age groups and UK regions
  • The average motor premium is now £816.

A surprise maybe, but the pandemic has actually led to a reduction in motor insurance premiums.

One small benefit of the Covid carnage and the various lockdowns has been the reduction of traffic on the roads and fewer miles covered by vehicles. This has resulted in a drop in the number of crashes (not to mention the environmental benefits with less road pollution), along with vehicles being open to illegal interference. The result is insurance premiums are down 2.5% over the period, with the average now sitting at £816.

Traffic levels were down almost a fifth in 2020 according to the latest government estimates[1]. It’s led the likes of The RAC to state that ‘2020 is having a profound impact on our travel habits’[2]. With roads emptying, it is no surprise that the number of claims made on motor insurance policies has also fallen sharply.

In truth, when looked at over 12 months, average premiums have fallen only 1.1%. This is because prices had been rising before coronavirus struck. But as we enter winter, the resurgence of coronavirus, the prospect of further local restrictions and perhaps even a national lockdown, it is expected that premiums will remain subdued for a while longer yet.

All Ages

“We are currently seeing premiums decreasing in all our age groups and across every UK region,” says Harriet Devonald, product manager at Consumer Intelligence.

Average overall premiums have increased 21.8% since October 2013 when Consumer Intelligence first started collecting data, but prices have now fallen more than 10% from the September 2017 pricing peak.

All age groups have witnessed broadly similar falls to their car insurance premiums over the last 12 months. The under-25s (-1.9%) led the way with the biggest yearly decrease, with motorists aged 25-49 (-1.0%) and the over-50s (-0.8%) following closely behind.

Unsurprisingly, it is the youngest driver cohort  that continues to fork out the most for car insurance (£1,954). In comparison, the over-50s typically pay £370 while those aged 25-49 hand over £628 for an annual policy.

“Even with telematics-based policies working hard to keep pricing affordable for the youngest drivers, there is still a huge difference when compared to the over-50 and 25-49 year-old sectors,” says Devonald.

While the introduction of telematics products, particularly for new and young drivers, dramatically reduced their annual premiums, the effect has levelled out. In the last three months, the under-25s  are now seeing the smallest price falls (-1.4%), with the biggest premium reductions found in our older demographics – the 25-49 year-olds (-3.0%) and over-50s (-2.8%).

Tech Transformations

Take-up of telematics-based policies remains low for our older driver groups. For motorists aged over 50, just 4% of the five cheapest quotes come from telematics providers. That rises slightly to 14% for drivers aged between 25 and 49. For those aged under 25, telematics policies continue to play a big part in keeping insurance costs down. These policies now make up 59% of the top five cheapest quotes for drivers aged under 25.

London drivers continue to be hit with the biggest increases to their car insurance policies. Over the last 12 months, prices in the capital have risen 3.8%. Just two other areas across the UK – Yorkshire and the Humber (1.4%) and the Eastern region (1.2%) – have seen prices rise over the same period. However, it is noticeable that in the last three months all UK regions have seen premiums decline. The largest fallers have been the North East (-4.4%), East Midlands (-3.9%) and the West Midlands (-3.8%). London (£1,499) remains the costliest place for car insurance, with Scotland (£513) the cheapest UK region.

Looking Ahead

It will be interesting to see what the future holds when it comes to post pandemic traffic volumes and premium prices. While more people are looking to utilise their own transport solutions rather than risking infection spread  through public transport systems, this is being balanced by a dramatic reduction in commuter traffic levels as more people seek to work from home. With the vaccination process now in full swing it is difficult to know whether the changes are temporary or longer lasting. Watch this space.

Region         

Price change seen over the last 12 months
(Nov 19 – Nov 20)

 Price Index
Last 3 months
(Aug 20 – Nov 20)		 Nov 2019
Average Premium
(5 cheapest)
London 3.8% -1.1% £1,449
Yorks&Humb 1.4% -2.8% £895
Eastern 1.2% -1.9% £746
Wales -0.6% -2.9% £591
E Midlands -0.7% -3.9% £719
Scotland -1.1% -3.2% £513
SE -2.6% -1.8% £726
NW -2.8% -1.9% £1,160
W Midlands -3.4% -3.8% £776
SW -3.9% -3.4% £473
NE -5.4% -4.4% £702

 

 The cheapest premiums were calculated by comparing the prices offered for 3,600 people by all the major Price Comparison Sites and key direct insurers. The top 5 prices for each person were compared to the previous month’s top 5, then these variations averaged to produce the index. 

Consumer Intelligence (CI) is data analytics company.  For more information, visit the website www.consumerintelligence.com

[1] https://www.gov.uk/government/statistics/provisional-road-traffic-estimates-great-britain-october-2019-to-september-2020 2.

[2] https://media.rac.co.uk/news/largest-fall-in-motor-traffic-since-records-began-in-1994-rac-comment-413909