While the period between May and August historically sees the most competition between insurers, driving premiums down in the process, this year things are looking different.
According to figures released by comparethemarket.com via their motor insurance index Premium Drivers,
the summer period sees aggressive pricing and the highest level of competition between insurers. Inversely, premiums typically peak in December.
But this year has been different. Their ‘savings variable’ measurement, the difference between the cheapest and the average premiums available on the market, hit 17.1 per cent in May. The gap is bigger than December 2015, which was 16.5 per cent. The difference between the cheapest policy and the average policy measured is now at its largest since December 2013. This is the first time the gap in March, April and May has been consistently higher than the December figure.
Comparethemarket.com speculated the industry is feeling the pinch from higher taxes. From Octo
ber 01 this year, the Insurance Premium Tax will rise further to 10 per cent, having risen from six per cent to 9.5 per cent in November 2015. With the added tax costs, insurers might be feeling less competitive and keeping prices more stable.
The index also showed that over the past 12 months the average premium across all age groups has increased by more than £100, from £594 in May 2015 to £698 in May 2016.
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