Insurance premium rise could be caused by comparison sites

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A recent rise in insurance premiums could be attributed to the use of comparison sites, a new report suggests.

The analysis comes from the latest AA British Insurance Premium Index, which found that the typical quote for annual cover rose by 2.3 per cent to £568.48 in the three months ending 30 July 2016.
Over the 12 months ending 30 June, the typical 'Shoparound' quote has risen nearly £84 from £484.86. This number is taken as an average of the five cheapest quotes received by a customer through both direct and comparison sites.

Michael Lloyd, director of insurance at the AA comments: "Premiums have not risen by as much over the second quarter as some commentators predicted although it's still an upward trend that I expect to continue over the rest of the year.

"For example, increasing numbers of car owners shop around for their cover every year, especially at a time when premiums are going up.

"As more people look for introductory offers there is less incentive for companies to offer loss-making prices to attract new business that will, a year later, go elsewhere. So I believe this is one driver of recent premium increases while insurers are looking for ways to better reward customer loyalty."

As well as insurers having no incentive to reward loyalty, Lloyd says "false or exaggerated claims for whiplash injury remain unacceptably high," further raising premiums.

Young drivers saw the biggest increase in premium, with the average policy increasing 3.5 per cent to £1,240.50.