Car insurance rates rise 2.7% in Q2 2011, price index says

According to the latest results of a price index published by Towers Watson and a leading car insurance comparison site, the average car insurance rate for a comprehensive policy increased by 2.7 per cent in 2011’s second quarter.

The average comprehensive policy is now £858 in the UK, according to the Towers Watson and motor car insurance price index.  The April-to-June rate of growth was actually diminished from the previous quarter, where rates were found to have increased by 3.8 per cent.

This slowdown has also had an effect on how high overall 2011 rates increase, the index found.  While the end of 2010 saw the annual rate stand at 38 per cent, its current figure is just 25 per cent.

Not only the cost of comprehensive cover rose during the second quarter of 2011 however, according to the research.  Third party fire and theft insurance increased by a rate of 1 per cent over the past three months, the survey found, while growth over the past 12 months from June was 33 per cent, bringing the average premium price to £1,132.

The continued slowdown in price increases came in spite of recent analysis by Towers Watson that found that car insurance companies had to pay £1.24 in costs for every £1 they took in premium payments last year.  Towers Watson also stated that research findings recently published by the Institute and Faculty of Actuaries had revealed that one out of every four UK third party car accident claims now had a personal injury claim as a component.

Duncan Anderson, director of Towers Watson, remarked that the market is still intensely competitive, which may be what is leading some firms to ease off premium increases.

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