While the AA’s recent car insurance rate premium index recently revealed that car insurance groups have finally begun to ease off on premium price increases, many critics have been reluctant to declare this a good sign for consumers.
Cheap car insurance quotes had fallen by £2, or just 0.3 per cent, throughout the three months ending 30 September, as reported by the Shoparound index from the AA. The index averages the three most affordable premium quotes from a wide range of insurance providers.
However, the slight dip is most likely destined to be all too fleeting, experts say. AA Insurance’s director, Simon Douglas, said that insurers have been increasing prices steadily over the last two years in order to close the rapidly widening gap between claims costs and premium income.
Explaining that ‘something had to give,’ Mr Douglas said that the gap has sufficiently narrowed to allow insurance providers to begin offering more competitive prices once more. However, the problem remains that insurers are still under significant inflationary pressures.
Next year will most likely see a continuation of increasing premiums, added Mr Douglas, albeit at a more subdued rate. He warned that premiums will likely begin to increase once more upon entering 2012, remarking that he would have concerns if premiums do start subsiding, as it could result to repeating the sharp premium increases of the past two years.
However, industry experts did say that if your renewal will not come due until the New Year, you may still be able to access reduced premium prices, even as other experts say the £2 price reduction may not make much of a difference to those renewing their policies at the moment.