Car insurance bills are skyrocketing five times faster than inflation, according to new research.
Data obtained by insurance and finance market research agency Consumer Intelligence shows that the average premium rose by 14.6 per cent in the past year – five times the current inflation rate of 2.9 per cent.
The government’s recent proposals to increase the Ogden rate – which sets pay-outs for large personal injury claims – has helped stabilise premiums, but rising claim costs mean that the amount people pay for insurance is still on the rise.
John Blevins, Consumer Intelligence pricing expert, said: “Prices are stabilising but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another insurance premium tax rise in the Budget.
“Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars, which cost more to repair, but also because the weakness of the pound means the cost of parts is rising.
“Older drivers are being hit with higher premiums because they are driving for longer and consequently becoming involved in more accidents.”
Drivers in Scotland and Wales currently pay the lowest prices for insurance, while those in the West Midlands and south east of England are seeing the lowest rises.
The cheapest premiums were generated by comparing the prices offered for 3,600 people by all major price comparison sites.
Younger drivers are using telematics to bring insurance costs down, which means that premiums for new drivers are slightly lower than in 2013. However, these systems are also being used by older drivers to reduce premiums.