At the end of last year many people were concerned that the cost of car insurance would increase dramatically due to two reasons. The first was because it was decided by the EU that car insurance companies could no longer give cheaper car insurance policies to someone because of their sex (i.e. to women), and the second because compensation to those injured in car accidents would be paid monthly instead of in one lump sum, meaning that it could increase due to inflation.
However, after the initial increase in car insurance premiums – mostly for women – prices seemed to drop back down again as if nothing had changed at all. This is due to the fact that car insurance providers have seen that the market is changing and are therefore adapting the way they calculate risk and how much this will ultimately lead to them charging their customers. Explaining this, Ian Crowder from the AA said: “Insurers are getting used to being gender-neutral now. It means as the year progresses, premiums for women will come down further. Drivers renewing at the end of the year, those who last renewed their cover just before the gender law came in, will make the greatest savings. Effectively, they’re having to start from scratch in the way they rate their risks.”
Meanwhile, Graeme Trudgill from the British Insurers Brokers’ Association (BIBA) said: “More than ever before, smaller cars with smaller engines that are worth less will be cheaper to insure for younger drivers. They might also look at training. There are insurers who will give younger drivers a 10 per cent discount with a BTEC Level 2 driving qualification. Others will give 15 per cent off if drivers have an in-car camera to monitor their driving. But there are plenty of brokers that specialise in young driver cover. These can be better at matching young drivers to the market and finding competitive offers.”
Even though new legislations have been passed (and probably will be passed in the future) it is interesting to see how car insurance companies are adapting to these changes and still managing to provide cheap car insurance quotes to their customers. Telematics, or ‘black boxes’, are also becoming more popular for those that struggle to get cheap car insurance, as they monitor how well each motorist drives and then adjusts their insurance accordingly. In the future there may be even more ways for car insurance companies to pass on savings to customers depending on how the markets change.