Contact: Ali Agmen-Smith
Deloitte
Public Relations
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The cost of third party motor insurance has gone up by 10% in the past 12 months, according to Deloitte’s Quarterly Motor Insurance report. The report shows the average cost of non-comprehensive (third party) motor insurance in August was £519 an increase from £473 at the same time last year. Comprehensive insurance was shown to have increased 4% to £458, up from £441 in August 2006.

The data comes despite suggestions that internet comparison sites are driving down rates. While Deloitte found that more than half of new business is now from the internet and that comparison sites are taking an increasing share of internet sales, most insurers are making a concerted effort to increase rates to improve profitability. Premiums have increased in 9 out the last 12 months, the first period of sustained increases since 2003.

Commenting on the findings, Catherine Barton, insurance partner at Deloitte said: “The key reason for the increase is insurers seeking to improve profitability. In the past several years, the underlying motor insurance market performance has been deteriorating with insurers’ results being buoyed by releases from their reserves.  This situation is not sustainable in the long term and, combined with the impact of major events such as the 2007 floods, rates were going to have to go up. We believe premiums will continue to rise for a few months yet.”

However she offered a warning to insurers looking to increase rates quickly: “Insurers who increase prices too quickly may find they don't achieve the increase in premium income they wanted. Instead they may just wave good bye to the customer.”

Catherine Barton advises consumers to shop around: “In spite of increasing premiums in the market generally, customers who shop around can still find a good deal - and not necessarily through a price aggregator. Those who don’t shop around are likely to have seen bigger increases.” She believes that insurers on the aggregators price comparison lists who offer competitive prices are well placed to pick up this 'shop around business'.

Ends

Notes to editor
Deloitte measures the average premium by using the cheapest direct/internet and cheapest broker premium offered for each of the 1000 insured risks in its sample portfolio.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.