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Motor insurance prices still tumbling

Motor insurance prices are still falling fast - dashing hopes at the start of the year that pricing in the sector could be stabilising
April 17, 2014

Hopes of stabilisation in motor insurance pricing evaporated earlier this month after the latest Confused.com/Towers Watson price index revealed further sharp falls. It reported that motor rates had fallen 7.5 per cent in the first quarter, meaning that rates had tumbled 19.1 per cent year-on-year. In contrast, the fourth-quarter index had reported just a 1.2 per cent decline - initially raising hopes that the worst could be over in the sector.

Still, the severity of that rate slippage may not be uniform across the sector. "Our suspicion is that actual trends among the quoted insurers are less bad than the latest index suggests," believes insurance analyst Oliver Steel of Deutsche Bank. Indeed, Admiral (ADML) has indicated that it would feel obliged to update the market if it experienced anything on that scale. That said, it's clear that motor rates do remain under strong pressure, while the Competition Commission's impending report into the sector adds further uncertainty.