Motorists are unlikely to benefit from cheaper car insurance for at least a year despite government action on whiplash claims, according to ratings and research agency Fitch.
Fitch believes that insurers will be reluctant to implement price drops before they see evidence that the government proposals have worked.
The ratings agency said: ‘Even if and when the proposals are implemented, we believe insurers will be reluctant to pass savings on to consumers before seeing evidence of reduced claims costs, so we do not expect the reforms to significantly affect prices before 2018.’
Find out more: best and worst car insurance – more than 30 insurers rated
Car insurance premiums tipped to keep rising
Fitch Ratings says that UK motor insurance premiums will continue rising because the levels of reserve releases that have supported profitability in recent years are unsustainable in the long term. Prices have been rising since early 2015, reaching a 10% year-on-year increase in the second quarter of 2016, according to the Association of British Insurers. However, Fitch said premium rates were still below 2012 levels and believed more rises were inevitable.
Indeed, last month, Which? reported that car insurance premiums could rise by more than a third following a claim, even if the driver wasn’t blame.
In July and August 2016, Which? obtained quotes from 12 major insurers, checking to see what difference it would make to a quote if someone had made a claim for a minor scrape that wasn’t their fault.
Esure increased its quote by 39% after a claim was added where the driver was blameless but their insurer had had to pay. More Than (33%) and Rias (29%) also upped their quotes significantly. And in a scenario where repairs had been covered by another driver’s insurer, just four out of 12 insurers increased the premium. These were More Than (33%), Esure (17%), AXA (14%) and Admiral (11%).
However, Fitch pointed out that faced with low investment yields and intense competition, insurers are looking to technology, notably telematics, for a competitive edge.
‘In 1H16 several companies reported double-digit growth in the number of telematics policies. Telematics provides a large amount of data on driver behaviour, enabling insurers to price for risks more accurately,’ the agency noted.
Cheap car insurance: how to find it
Here are three top tips to get the cheapest price for your motor insurance. For more guidance, see our guides on finding cheap car insurance.
1. Start with a comparison site
Use a comparison site to find several quotes quickly and easily. Remember to check the details of the policies you are interested in to make sure they cover everything you need.
2. Avoid auto-renewal
Insurers reserve the best deals for new customers, rather than existing customers who are auto-renewing. Never allow your policy to roll into another year without shopping around for a lower premium. Our eMindme reminder tool will help ensure you don’t miss your miss your renewal date.
Even if you want to stay with your current provider, getting quotes from competitors can be a great way of scoring a better deal. Once you’ve found a cheaper rate you can use this as a platform to haggle. Our guide on haggling for better car insurance deals includes a field-tested script.