Drivers paid an average of £838 for their car insurance between July and September – £100 more than they stumped up in the same period of 2016.
Costs did reverse one per cent in the three month period but comparison website Confused is warning that cover is ‘on course to be at its most expensive ever by 2018’.
In the last decade, premiums have increased by 65 per cent, the website said. That’s the equivalent of a £329 hike in car insurance costs for UK drivers.
Record premiums: Despite a 1% decline in car insurance costs last quarter, Confused warned that premiums could hit their highest level ever
Just 12 months ago, the average premium was £737, signalling an increase of 14 per cent in a single year.
That’s despite average costs coming down in the last quarter – a minor dip of £9 – as insurers readjusted after the Ogden rate cut from 2.5 per cent to 0.75 per cent in February.
While it’s the first decline in average car insurance costs in over three years – since the second quarter of 2014 – it will be short lived despite the governments attempts to increase the Ogden rate, which would ease pressure on insurers.
Confused said it still expects premiums to soar to unparalleled heights by the turn of the new year – and there was already a one per cent increase in September alone.
As premiums rise, it will be male drivers who will feel the brunt of the increases more than women.
That’s despite strict rules being in place to abolish the gender gap when it comes to insurance calculations for drivers.
Despite this, male driver policies leapt £109 – or 14 per cent – in the last year, while women saw their premiums increase by just £91 – 13 per cent- in the same period.
This means female drivers are paying around £116 less for motor insurance.
The reason for the disparity? According to the price comparison group, it’s because men are still seen as a bigger risk because they have more motoring convictions and also tend to drive more powerful and pricier cars than women.
Some older drivers are currently paying more for motor insurance now than they ever have before
There was a marked difference between different age groups too – and it doesn’t make great reading for those nearing – and already enjoying – their retirement.
Drivers aged between 57 and 61 and those between 66 and 69 are paying more for vehicle cover today than ever before, the statistics revealed.
It was 61 year-olds who saw the biggest annual increase of all ages, with their policies spiking 23 per cent – the equivalent of £100 year-on-year.
It’s also a six per cent increase on the previous quarter, which translated to a hike of £33 in just 3 months.
This is nothing compared to the outlay for the youngest drivers.
Any vehicle owner aged 17 paid £2,272 on average for their premiums last quarter, though it was 21 year-olds who saw the biggest jump in monetary terms with a 19 per cent increase in insurance costs working out at a huge £279 leap compared to 12 months previous.
Looking at regions, Scotland suffered the most.
Drivers living in the Borders of Scotland watched their premiums shoot up by 12 per cent – £76 – in the last three months to £684.
Amanda Stretton, motoring editor at Confused, said the cost of car ownership is set to increase to record highs in the next 9 months.
She added: ‘With car insurance costs rising by 65 per cent over the last decade and 14 per cent in the last year it’s no wonder drivers are dreading their next renewal date.
‘Worryingly, there is every possibility that car insurance prices will be the most expensive on record during the first half of next year.
‘Luckily, insurers are required to show drivers what they paid for their car insurance last year at point of renewal.’
What is the Ogden discount rate?
The calculation, also known as the Ogden discount, is designed to make sure claimants are not under or overpaid. Until 20 March, it hadn’t changed since 2001.
The money must put the victim in the same financial position as if they had not been involved in the accident, and be enough to fund any loss of earnings and care costs for the rest of their lives.
The discount rate assumes that if a person invested the lump sum they were given, they would put it in a low-risk investment – this safe, interest-paying investment is considered to be UK government bonds.
If a claimant chooses to take the lump sum as cash, instead of investing the money given to them, the discount is applied to that amount of money.
The change from 2.5 per cent to -0.75 per cent now assumes that instead of an investment making a 2.5 per cent return, it will now decrease over the claimant’s lifetime.
However, the yield on ten-year UK gilts is currently 1.182 per cent, while the FTSE All-Share stock market index’s dividend yield is 3.48 per cent.
The ABI said in practice most people who invested a lump sum would seek professional financial advice and invest in a mixture of investments and the rate needs to reflect this.
The Government’s latest proposal will see the discount rate changed again, which should help stabilise rising prices.