Car insurance premiums have dropped by £26 between the months of February and May this year. This follows a positive downward trend over the past two quarters which has seen prices decrease by £35. Despite this overall downward trend, average premiums have actually been steadily creeping up since February, with price increases of £9 a month, equaling a total price increase of £28. While prices have still increased between March and May, it is less pronounced this year, which is good news for drivers and indicates a more structural decrease in premiums. Over the past six years, the average increase in the three months has been £28, which is almost three times higher than the increase this year (£10).
In addition to this, the cheapest premiums available on the make have also decreased to the lowest level since Q4 2016, dropping by £20 to £598.
The reason for the fluctuation is price could be as a result of Government changes, such as hikes to Insurance Premium Tax (IPT) and changes to the personal injury discount rate.
Changes to IPT and the personal injury discount rate have had on drivers over the past few years, having added £208 to the cost of car insurance from 2015 to date.
The new Policy Premiums report from comparethemarket.com estimates that these changes have cost British motorists an estimated £7.8billion.
Dan Hutson, Head of Motor Insurance at comparethemarket.com, said: “After years of relentless premium hikes, there is finally some light at the end of the tunnel for British motorists.
“Premiums are now lower on both a quarterly basis and a year on year basis. Car insurance, like many markets, is cyclical.
“While premiums are calculated using a variety of factors, supply and demand plays a fairly large role in the average pricing of these products.
“For example, the volume of new cars coming onto roads has decreased in recent months which could have been the cause behind this latest fall as insurers try to snap up new customers with lower prices.”