Joy for drivers as insurance premiums hit the brakes

The cost of car insurance for drivers in Scotland has plunged dramatically over the past 12 months, a report out today reveals, ending three years of near-record increases.

The trend is expected to continue for at least the rest of this year, experts believe, delivering a timely shot in the arm for motorists faced with high fuel prices.

However, fears of a sharp hike in car insurance costs for young women drivers appear to have been realised in the early months of 2012. Female drivers are bearing the brunt of rules introduced in December banning insurers from using gender as a factor when setting prices, with premiums reaching new highs.

Women aged 17 to 20 are paying almost 14 per cent more for car insurance than three months ago, with premiums up by a fifth over the past year, according to the latest Confused.com/Towers Watson Car Insurance Price Index.

The increases, which will leave many young women unable to afford car  insurance, are the result of a 2011 ruling in the European Court of Justice that ended the exemption of insurers from European gender equality principles.

Young women drivers lose out under the new rules because their premiums have been brought in line with those of their male counterparts.

Young men have long paid the highest premiums, as they’re statistically the most likely to be involved in crashes. But they, along with older males and females, have seen the cost of insurance come down markedly over the past year.

The average male aged 17 to 20 is now being quoted £2,848 for comprehensive car insurance, down from £3,798 just two years ago, the index shows. And older males and females have seen premiums plunge over the past year, with the average UK comprehensive car policy almost 10 per cent cheaper than a year ago.

Edinburgh drivers are paying 9.3 per cent less, on average. Glaswegians have seen premiums drop by 11.8 per cent, while motorists in Aberdeen and Dundee also enjoyed price reductions of more than 10 per cent. But drivers in the Borders and North-east Scotland are paying the UK’s cheapest premiums, with an average premium of just under £500 compared with a typical UK quote of £736.

Gemma Stanbury, head of car insurance at Confused.com, said: “With the EU Gender Directive coming into effect late last year, it’s clear to see that the insurance industry has reacted to the change in  legislation over the last quarter.

“However, with the emergence of new technologies such as telematics, motorists who can prove that they are careful behind the wheel can [get] discounts on premiums, regardless of age or gender.”

Its figures are published just days after AA Insurance also reported a decline in car insurance costs. Simon Douglas, director of AA Insurance, said the trend represented a reversal of fortunes after three years of record increases: “Sharp hikes in personal injury claims, fraud and uninsured drivers, to say nothing of last year’s gender directive, have all helped to pile on the pounds.”

But premiums are now set to continue falling, he predicted. Douglas pointed to the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which includes a ban on referral fees for personal injury claims. While the act applies only to England and Wales, drivers across the UK will benefit from lower premiums as a result, according to Douglas.