Average motor premiums have gone up by £48 compared to this time last year, hitting a record high of £484 for the second quarter of 2017, according to the Association of British Insurers.
This is an 11% increase, making it the fastest year-on-year rise since records began five years ago.
The rapid increase follows the recent Government decision to drastically cut the personal injury Discount Rate. Insurance Premium Tax also went up from 10% to 12% on the 1st June.
Given unprecedented pressures on motor premiums in the last quarter, the ABI has also decided to publish month-by-month premium data to show the growing impact of the discount rate change and tax rises during the quarter. These show average premiums rising in June to £498.
Director General of the ABI, Huw Evans, says: “This dramatic increase drives home how important it is the Government press ahead with a new framework for the Discount Rate and call a stop to further hikes in Insurance Premium Tax.
“The UK is one of the most competitive motor insurance markets in the world, but the unprecedented increase in claims costs is driving up prices to record levels. Most younger and older drivers are likely to face increases even higher than this, hurting people who can least afford it. Worryingly these increases are unlikely to be the end of the road if reinsurance premiums go up at the end of the year, adding further costs to insurers.”
Interestingly, research from Comparethemarket shows that accountants pay the least amount of car insurance of all professions.
They pay on average £706.72 a year, compared with entertainers and sportspeople who pay almost double that at £1,408.61.