Car insurance premiums rise in last quarter of 2017 with over-65s hit with biggest increases

Average quote for a fully comprehensive policy rises from £553 in the third quarter of the year to £574 in the fourth quarter

People aged between 21 and 24 were hit with above-average cost increases on a year-on-year basis, of 7 per cent (PA)

UK drivers were hit with a 4 per cent price hike on their car insurance premiums in the last three months of 2017 compared to the previous quarter, new research has revealed.

The average quote for a fully comprehensive policy rose from £553 in the third quarter of the year to £574 in the fourth quarter, a study by MoneySuperMarket found.

The company analysed more than 1.5 million quotes and also noted big regional disparities in price movements.

Drivers in Lincoln and Wolverhampton saw the heftiest increases, with fully comprehensive premiums rising more than 9 per cent, while those in Sutton, South West London saw the biggest drop of 4 per cent.

Despite the rises in the final three months of the year compared to the third quarter, the average cost between October and December fell one per cent compared to the same period in 2016, with women seeing a decrease of almost 3 per cent on average and men handed a 0.5 per cent cut on that basis.

Nonetheless, some age groups endured a big hike in their car insurance costs. Over-65s paid an average of £273.02 for a fully comprehensive policy in the last quarter of 2017, which was almost £20 more than they did a year earlier.

Those aged between 21 and 24 were also hit with above-average cost increases on a year-on-year basis, of 7 per cent, equating to a rise of more than £73 to £1,129.

Three key factors are thought to have exerted upwards pressure on claims in 2017: changes to the discount rate applied to claims pay-outs, the increase in June to insurance premium tax (IPT) and an increase in fraudulent claims.

The discount rate was reduced from 2.5 per cent to minus 0.75 per cent in March, meaning that insurers have to pay more compensation to claimants who are injured in car accidents.

Looking forward though, some relief could be in store for motorists. The Government announced in September that it would overhaul the way that the discount - known as the Ogden rate - is calculated.

Kevin Pratt, consumer affairs expert at MoneySuperMarket, said the change is expected to take place in 2018 and is likely to allow insurers to lower their premiums.

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