I write this having recently had to renew my car insurance. I am one of those who will shop around to see if there is better deal elsewhere but I was also intrigued by new research coming from the Association of British Insurers (ABI) suggesting that the cost of car insurance has fallen to its lowest level for two years. Is that so?

Not surprisingly, having just received my renewal quotation, I am one of those who did not see insurance costs falling. On the contrary, despite having 9 years of no claims, no points on my licence etc and there being no alterations to my position, other than both me and my car being another year older, my car insurer chose to increase my insurance by a whopping 50%!

But car insurance is at its lowest level for 2 years the ABI tells me? How on earth could there be any justification for such a large increase in my car insurance?

The ABI claims that the average price paid for car insurance fell by £15 to £466, between January and March 2019, the lowest quarterly figure since Q1 in 2017. Apparently, this fall is "in anticipation of the introduction of the Civil Liability Act”, which will only come into force in April 2020. Quite remarkable that the insurance industry can reduce its premiums before these further reforms have come into effect (yes there have been lots of other reforms already on the premise that insurance premiums will fall).

The ABI’s claim that premiums have reduced is based on a survey of the prices drivers paid for comprehensive and third party cover.  Perhaps that may be more reflective of real premiums being paid, rather than looking at renewal notices. Delve a little further and it doesn’t take long to find a report from GoCompare which reveals that loyal customers are the ones paying higher prices whereas new customers typically attract the best deals.

When renewing my insurance, having shopped around and tried an online comparison site, I found a better level of cover and for a slightly cheaper price from my existing insurer! So, after having had a renewal quotation increasing my insurance by 50% it is now cheaper than it was last year.

Why didn’t my insurer offer this insurance in the first place? The answer here may lie in the GoCompare report which says that 62% of motorists allowed their car insurance to renew automatically. If automatic renewals are always significantly increased, the insurer will always benefit.

Since 2017, insurance renewal documents are now required to show both the renewal cost as well as the premium paid the previous year. Why would you stay with your motor insurer? Remember that loyalty does not pay in motor insurance.