# AA 2011 British Insurance Index - Avg Ins prices.



## The_Bouncer (Nov 24, 2010)

As taken from Telegraph motoring :

The car insurance industry in Britain is currently under “investigation” by the Office of Fair Trading. It is also being probed by the House of Commons Transport Select Committee, which has prolonged its long-running inquiry into how insurers work and why they charge what they do. 

So it’s becoming cheaper to insure a car in Britain? The fact is that when comparing like with like – October 2010 versus October 2011 – car insurance prices have continued to rise while outstripping general inflation, itself at a 20-year high . 

The best way to measure prices charged for cover today against previous years accurately is to refer to the AA-compiled British Insurance Premium Index. The latest (third quarter, 2011). Its over-optimistic headline screams of prices falling, rather than rising – but if the motoring majority believes that, it’ll believe anything.


In fairness, the more revealing and educational “market summary” section clearly states that the “average premium” for comprehensive cover rose from £1,249.71 in October 2010 to £1,449.85 in October 2011, an increase of 16pc. But it gets worse because, comparing like with like, third party, fire and theft (TPFT) cover rose from £1,246.41 to £1,513.03 over the same period, a 21.4pc increase. 

Apart from demonstrating that prices are not falling but are rising steeply year on year, the index also proves that anther motoring milestone – the £1,500 (average) insurance policy – has been reached. 

The AA also admits that in 1994 comprehensive cover was typically £384.50 per year and has since risen by 288pc. But if drivers who opt for this high level of cover feel hard done by, they should spare a thought for TPFT customers. They paid an average £333.39 for their policies in 1994, but have seen the price rocket by 354pc. 

In view of the fact that, traditionally, this sort of basic cover was the only way that less well-off or occasional drivers (students, the low-paid, retirees, etc) could afford to drive, it’s scandalous that it has become so expensive. Why does TPFT cover now costs more than superior comprehensive insurance? 

According to the AA’s market summary for price comparison websites, these are the worst offenders when it comes to the soaring price of TPFT policies. This time last year they were typically charging £909.02 for annual cover. Since then, the AA Index says they’ve shot up to £1,280.87 – an increase of 41pc. 

Incidentally, and again comparing like with like, AA data shows that those same sites hiked the average price of comprehensive cover from £888.84 to £1,053.28 year on year, or 18.5pc. 

Confused.com tends to shout louder than any of its competitors about the low prices available. Earlier this week the company wrote to me to claim that “we’ve saved customers £419 million in total”. What’s more it appeared to be suggesting that it’s charging customers the same, or less, but certainly not more for policies. 

“We’d like to stress that we have not upped our prices,” a spokesperson insisted. When we repeatedly asked, in writing, why comparison sites are asking TPFT customers to pay, on average, 41pc more this year than last year, a reply wasn’t offered. 

The AA insists that in 2009, for every £100 the car insurance industry had “taken in” in premiums, £123 “was being paid out”. Yet the AA does not mention corresponding income/payout ratios for 2010 and 2011. In the light of ever-increasing insurance costs, surely most insurance companies should now be profitable. 

Of far greater significance than the AA’s claim that insurance prices for consumers have taken a “fall” is its much more realistic warning that “premiums are likely to continue rising next year”. 

:tumbleweed:


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