Car insurance premiums could be put into overdrive following a Government decision to scrap plans to introduce 'whiplash reforms', the insurance industry has warned. But you might be able to lock in a cheap renewal quote if you act ASAP.
It had been hoped the introduction of the Prisons and Courts Bill, which contained reforms to how whiplash injures are compensated, would help off-set other factors that have contributed to a recent surge in car insurance rates.
However, the Bill has been abandoned in light of Prime Minister Theresa May's move to call a snap general election on 8 June.
The leader of the House of Commons, David Lidington, last week confirmed the Bill has "fallen" due to a tight parliamentary timetable.
Check out our Cheap Car Insurance guide for help in minimising premium rises.
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'Little prospect' of a reduction in premiums
Despite the Association of British Insurers (ABI) previously admitting that customers would most likely continue to face rising car insurance rates, regardless of the whiplash reforms, there was an expectation that the introduction of the reforms would slow the price increase.
But even that has now been cast into doubt following the binning of a Bill that contained proposals to scrap the right to compensation, or – at the very least – put a cap on the amount that people can claim for minor whiplash injuries.
Michael Lloyd, the AA’s director of insurance, said: "This is the second time that the reforms have been dropped. They were shelved last October following the Brexit vote, but were re-introduced by the new government.
"Drivers have seen their car insurance premiums rocketing and most will react with despair that the whiplash gravy train once again has the green light to carry on.
"There was some hope that if claims could be stemmed it would help to bring premiums down. There seems little prospect of that now."
Despite their shelving, the whiplash reforms could make a reappearance after the election much like the decision to ditch plans to hike probate charges.
What's currently happening to car insurance prices?
Motor insurance premiums have risen 8% since the first quarter of 2016, taking them to their highest level since 2012, according to the ABI's latest figures.
The ABI's 'motor premium tracker' – which measures prices consumers actually pay for their motor cover, rather than quotes – shows that in the first quarter of 2017:
- The average premium, at £462, rose by 8% since Q1, 2016, adding an extra £34 /year to the cost of cover.
- For the first time average premiums in Q1 have not fallen when compared to Q4.
- The average premium is now at its highest level since the ABI started collecting the data in 2012.
How can I avoid paying more for my premium?
It remains to be seen how abandoning the whiplash reforms will impact premiums, but you can use the information that's currently available to secure cheaper deals.
For instance, we know the latest insurance premium tax (IPT) hike (from 10% to 12%) will be rolled out in June – so it's worth checking now if your insurance is due for renewal, as it's possible to lock in a more favourable quote within 60-90 days before a policy is due to start.