The cost of car insurance is dropping at record rate in the UK, according to the insurance sector of the AA.
Over July, the average annual comprehensive car insurance quote was £594.84 – down 9.8 per cent from last July (£659.53). This was the biggest recorded decrease since the AA insurance index began in 1994.
The AA said that the fall in price was down to, in part, clampdowns on fraud and restrictions on claims management companies. However, premiums are still higher than they were six years ago.
The research also found that third party, fire and theft quotes were also down on July 2012’s average figure by 4.8 per cent to £820.58.
New gender equality laws have also seen premiums drop for men by far more than expected, while women’s have remained around the same.
Claims of a fraudulent nature have been found to have been reduced; these mainly include claims for whiplash, something very hard to disprove.
AA Insurance director Simon Douglas said insurers previously faced “a fast-widening gap between premium income and claims costs – largely driven by whiplash injury claims and fraud, which saw very sharp premium increases between 2009 and 2011”.
“That gap is closing and premiums are falling again thanks to competition, as well as improved fraud detection by the insurance industry and tightening of the law that is beginning to curb the number of spurious new whiplash injury claims,” he said.
“The news that hundreds of rogue ‘no-win no-fee’ claims firms have been reined in is welcome and, in part, falling insurance premiums reflect that.”
Justice Minister Helen Grant said: “We are turning the tide on the compensation culture which has pushed up the cost of insurance for drivers, schools and business – and taking another important step to reducing the cost of living for ordinary people.”
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