THE car insurance market is in “turmoil”, with some providers raising their prices while others slash them to win more customers, a study has found.
The average of the five cheapest premiums for comprehensive policies sold directly has soared by 8.5 per cent year-on-year to £1,034 for annual cover, the AA British insurance premium index found.
However, the average cheapest quotes found on price comparison sites for someone with the same risk factors had decreased by 3.3 per cent over the year to £631.
The latest study records six months of “little movement” while young drivers bore the brunt of the recent rises.
Premiums for young men aged between 17 and 22 stood at £2,792 in the second quarter of this year, while premiums increased for women of this age to reach an average £1,995.
AA Insurance director Simon Douglas said the market is “in turmoil”, adding: “Competitive pressure is leading some companies to make big premium cuts on price comparison sites so that they can increase their portfolio of customers.
“While this is great news for consumers, they need to make sure they’re getting good cover, not just a good price.”
Mr Douglas said “significant inroads” are being made to tackle fraud although insurers are still handling “excessive” numbers of whiplash claims, which push up premiums.
“We expect the industry eventually to have routine access to DVLA data and the sooner this happens the better,” he said.
Scotland remains the cheapest region to buy car insurance with an average cheapest quote of £727 while Greater Manchester and Liverpool are the most expensive with average quotes of £1,648.