The pandemic is the main factor driving down prices, a survey from Willis Towers Watson has found.
Comprehensive car insurance premiums have fallen by 1% (£5) in Q3 of 2020 due to the pandemic, according to the latest Confused.com’s Car Insurance Price Index in association with Willis Towers Watson (WTW).
The findings are based on price data compiled from almost 6m customer quotes per quarter.
Prices have dropped to £765 over the last three months with drivers paying £50 less than they were at the start of the year, it found.
This makes it three consecutive quarters since the average cost of car insurance has fallen.
It follows an £18 (2%) increase in the past year.
Graham Wright, UK lead of P&C personal lines pricing at WTW, said:
“The further fall in premiums during the last quarter is perhaps unsurprising as motor insurers reflected on a relatively positive experience for the year to date. But with further Covid-19 restrictions being introduced and a market response to the FCA’s recently released pricing practices report still to be factored in, uncertainty in premium levels continues.”
Biggest challenges Wright added:
“One of the biggest challenges for insurers and intermediaries alike will be managing the transition to new world pricing given current market competitive pressures, and therefore deciding how and at what point price changes should be made. It certainly remains one of the most demanding times for insurance pricing.”
Aged 17 drivers benefited from the biggest price fall with a 7% (£140) quarterly price decrease and their annual premiums down to £1,911.
Meanwhile, drivers aged 33 experienced the biggest increase of 2% (£13), increasing annual premiums to £705.
Drivers in the Scottish Borders saw a big quarterly drop in prices and insurance premiums decreased on by 5% (£30) to £554.
Locally towns in Scotland saw the greatest quarterly drop in prices, which was led by Galashiels where premiums fell by 7% (£42) with drivers paying £542 in the last three months.
This was followed by Glasgow and Motherwell – both saw a 5% decrease in premiums.
However inner London was the only region in the UK to buck the downward trend in prices. Comprehensive car insurance for them increased by 3% (£32).
Drivers in the West Central London saw the sharpest rise in the Q3 at 32% (£363), drivers paid £1502. This was the most expensive place in the UK to buy car insurance.
The cheapest town was Dorchester, drivers paid £530 for car insurance over the last three months.
Turbulent Louise O’Shea, chief executive of Confused.com said: “It’s been a turbulent few months for the world of car insurance and it’s likely to remain that way for some time as insurers try to adapt to dramatic and constant changes in driver behaviour.
”Our analysts will be helping insurers to navigate this tumultuous period, but volatile pricing movements are likely to be a fixture of the coming year.”
“What we do know is that more and more people are shopping around as they, understandably, look to make savings in the current economic climate.
”The FCA is making proposals which is expected to make switching even easier by streamlining the auto-renewal cancellation process, so we may see people taking advantage of this as they become increasingly sensitive to price.”