Are tumbling petrol prices behind rising insurance costs?
With the UK economy still struggling to find its feet, it’s no surprise everyone wants to save money on their fuel bill. Our thirst for reasonably priced petrol may be having unintended consequences, however.
New figures reveal that the amount of drivers rushing to garages to top up their tanks with cheap fuel means there are more people than ever on our roads, precipitating a rise in the cost of car insurance premiums.
According to these new statistics, released by a leading online comparison website, the cost of motor insurance policies in the UK rose by £12, somewhere around 2%, during the last three months of 2014. It was the first time in almost three years to see a consecutive quarterly increase, rising to an average of approximately £600.
More motorists than ever hit the roads in 2014, causing the total number of miles driven to rise by more than 2%. According to Stephen Jones, an analyst at Towers Watson, plummeting petrol prices, which have fallen by almost a fifth since June, allowed families to travel more often. Currently, a litre of petrol costs as little as £1.10, reduced from £1.33, according to figures supplied by RAC.
Motorists may be happy to save some money on their fuel, but the resulting increase in traffic has inevitably led to a higher number of automotive accidents. As a result, Stephen Jones claims insurers are scrabbling to safeguard their profit margins by increasing premiums. “Logically, insurers might expect more accidents and more claims [due to the increasing number of vehicles on the road],” he said.
Although analysts were quick to lay the blame for the rise in insurance costs at the feet of falling fuel costs, the rise can also be attributed to the huge numbers of new cars sold to consumers in 2014. Statistics obtained from the Department of Transport reveal that in excess of half a million new cars were registered for road use in 2014, a rise of almost 2% compared to this time last year.
With oil prices currently at a six-year low, analysts predict insurance costs will only continue to climb.