The car insurance market in the UK has been awash with activity in recent months as providers and customers come to terms with the effects of what was initially labelled the `credit crunch` and is now a full blown recession.
In January, the AA British Insurance Premium Index reported that car insurance premiums took a sharp jump in the final quarter of 2008, rising by an average of almost one per cent a month. Its figures show that in January
2009 the average comprehensive car insurance premium stood at £741.66 – up from £720.83 in October 2008. Third party fire and theft policies have also risen from an average of £900.42 to £931.31 over the same period.
Despite that rise however, the AA also reports that early figures suggest there is unlikely to be much movement in the first quarter of 2009 despite the fact that predictions of 10 per cent rises have been made for the year as a whole. This is because insurers tend to compete for deals during this, the busiest period of the year. However, rapidly rising costs and falling reserves mean that these deals may not be around for long.
The good news is that although premiums are rising, the car insurance market continues to get more competitive.
For example, Stay Sure Travel Insurance announced at the beginning of March that it will be launching a car insurance product; while several established providers have added their products to some of the leading comparison websites in the UK. By using these tools it is easier than ever for consumers to compare policies. The success of comparison websites places pressure on insurers to keep premiums at an affordable level so they don`t lose business.
So as long as consumers are willing to shop around there are plenty of deals to enjoy. In fact the AA British Insurance Premium Index shows the average comprehensive premium for customers that shop around now stands at £500.54 – more than £200 less than the industry average.
Rise of the specialists
More consumers are searching for unique policies that are tailor made for their needs. Specialist policies have been around for a long time for niche markets such as high performance cars, imported cars, classic cars and even female and young drivers. However, now even more unique policies have emerged.
One is Salaam Halal Car Insurance, which is designed for Britain`s two million Muslims. It pays respect to Shariah Law by pooling contributions that are invested in Shariah compliant investments with any investment profits distributed back to the fund. Effectively this means that policyholders are adhering to the Islamic principle of guaranteeing each other rather than paying premiums.
The Green Car Insurance Company, which offers carbon offset schemes to eco-conscious drivers, has also celebrated a milestone. In March 2009 it announced that it had written its 25,000th policy since its launch in August 2007.
Number of uninsured drivers on the rise
Research by a comparison website in March 2009 found that one in five motorists has driven a car without insurance, while nearly one in ten has driven their own vehicle without insurance.
It seems that with the global economic crisis biting, more motorists are looking to avoid expensive premiums in order to save cash. However, as the report suggests this could prove costly with on-the-spot fines in the region of £200 and the risk of having a vehicle impounded which could set drivers back a further £150.
So instead of breaking the law, motorists are encouraged to shop around for cheap car insurance so they can get a sufficient level of cover without breaking the bank - or the law.
Visit www.car-insuranceuk.com regularly for the latest car insurance news and links to car insurance providers. Please follow the links on this page to obtain your own personalised cheap car insurance quote and make your own comparison.
© March 2009
