Car Insurance Prices Rise Again

As 2010 gets into full swing, it seems there is little in the way of good news for motorists as car insurance premiums have taken another hike upwards. The latest Confused.com/EMB Car Insurance Price Index shows that car insurance prices rose again in the first three months of 2010, by 4.3 per cent. This means that, overall, car insurance costs have increased 14.3 per cent in the space of a year, taking the average quoted premium to £524.

Who is affected?

The 17-20 year old age group were once again the worst hit - seeing an overall increase of 6.6 per cent over the quarter. All in all, that means that teen drivers are now paying, on average, £300 a year more on their car insurance than they were at the end of 2006.

Annually, though, the biggest losers were women aged between 26 and 30, with massive increases of 17.3 per cent amounting to an average premium of £494. While this might indicate that the car insurance gender gap is narrowing, it should be borne in mind that this is still £175 less than a man of the same age band would expect to pay.

Elsewhere, older customers of both sexes were generally hit with less drastic increases than those in their 20s. The figures once again pointed towards a steady decrease in prices from the age of 50 onwards, while the people paying least on car insurance overall were the over 60s - specifically those between 66 and 70, who enjoy the lowest yearly premiums (£286) of all age bands.

Overall, though, the theme is one of steadily rising prices across the board - a trend that, sadly, looks unlikely to halt any time soon.

Why are premiums increasing?

When prices increase, consumer groups are often quick to accuse businesses of profiteering. Whether that is valid in this instance will become evident when the Financial Services Authority (FSA) publishes motor insurers' underwriting results in the coming quarter.

However, insurers are continuing to struggle with underwriting losses and other costs, which have contributed to the steady increase in premiums since the beginning of 2009. EMB partner Peter Lee warned: "With claims costs still on the rise, I suspect there is more pain to come for the consumer before prices level off."

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