Van drivers face steep yearly insurance rises despite recent price drops

Date: Friday, February 16, 2018 | Author: Sean Keywood

Van drivers are benefitting from cuts to insurance bills, but premiums remain far higher than they were a year ago.

Analysis from Consumer Intelligence shows that premiums fell by 3.5% during the past three months, with nearly half of that drop occurring in the past month alone.

However, average premiums, which currently stand at £1,202, are still 20.3% higher than they were 12 months previously.

Consumer Intelligence says that a u-turn by the government on the discount, or Ogden rate (that had been set at -0.75%), which sets pay-outs for major personal injury claims, has enabled insurers to reverse rises, and that confirmation of a rate of between 0% and 1% could mean more cuts to come.

But a rise in the size of claims, partly driven by drivers owning more technologically advanced vans as well as fraud and increased repair costs, has driven the year-on-year rise.

Van drivers aged over 50 saw the biggest annual rises, at 26.7%, to an average premium of £561, while drivers aged under 25 saw the smallest rise, at 13.5%, although their average premium of £3,561 remains the highest by age group.

Consumer Intelligence said there is now virtually no price difference for drivers choosing carriage of own goods cover – suitable for those relying on their vans for work – and those choosing social, domestic and pleasure cover suitable for those using vehicles as car substitutes.

Average annual carriage of own goods cover rose by 20.2% in the year to £1,203 while social, domestic and pleasure increased by 19.5% to £1,198.

Consumer Intelligence pricing expert John Blevins said: “The market is returning to normal now the Ogden effect is wearing off and it is possible we could see more cuts once the new rate is decided.

“But the other market fundamentals remain the same with the weak pound increasing the cost of repairs when parts have to be brought in from overseas, and more advanced technology in vans driving up the cost of claims.

“The rise in carriage of own goods premiums shows there are rising claim costs from customers using vans for their business, which may suggest some signs of a rise in fraudulent claims.”

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