LONDON Jan 27 The cost of car insurance in
Britain has dropped 9 percent in the past year as more customers
use the internet to shop around and falling claims feed through
to prices, a new survey shows.
A quarterly index of car insurance costs launched by the
Association of British Insurers (ABI) on Monday shows the
average premium on comprehensive policies in the last three
months of 2013 was down 36 pounds year on year ($59.41) at 370
The fall adds to a two-year slide that analysts put down to
growing use of price-comparison websites and legal reforms that
make it harder to pursue fraudulent injury claims.
"Insurers are fulfilling the commitment they made to the
government to pass savings from changes to the civil litigation
system to hard-pressed motorists through lower car insurance
premiums," said James Dalton, the ABI's Head of Motor Insurance.
However, insurers are cutting prices largely on the
expectation of lower claims costs prompted by the civil
litigation reforms and analysts are warning of a risk to
"If the ultimate effect of the government's reforms is not
as successful as insurers expect, the decline in premiums would
not be matched by a commensurate reduction in claims and would
lead to a further deterioration in underwriting results,"
ratings agency Moody's said on Monday.
Britain's car insurance market is dominated by Aviva,
Direct Line and Admiral, but the market is
becoming increasingly competitive.
The ABI said that British consumers are more likely to shop
around for motor insurance than for mobile phone contracts, with
81 percent of respondents to a survey considering policies from
more than one insurer before making a purchase.
The ABI's index tracks actual prices paid for insurance
contracts unlike existing indexes, which rely on quotes.
An index provided by price-comparison website Confused.com
and consultancy firm Towers Watson published this month
suggested that the price slide is starting to