SME premiums increased 11.5% over three years but consumer’s premiums begin to reduce
A new general insurance price index from the British Insurance Brokers’ Association (BIBA) and Acturis, an insurance IT service provider, has been launched to track the cost of insurance premiums.
It includes three ‘shopping baskets’ to represent insurance buyers. A consumer basket including a motor and home policy; a small and medium enterprises (SME) basket made up of a package policy and a commercial vehicle; and a larger commercial basket made up of a commercial combined, fleet and combined liability policies.
SME shopping basket
The BIBA-Acturis Insurance Price Index shows that average premiums for an SME insurance ‘shopping basket’ have increased by 11.5% since 2010.
This reflects the increasing premiums for commercial vehicle insurance which rose nearly 18% in 2011, then increased by 3.7% in 2012, and reduced by 2.3% in 2013 to bring commercial vehicle policies around 19% higher than 2010 levels.
Consumer shopping basket
The consumer ‘shopping basket’ has a 2% reduction in average premiums compared to 2012. Overall the average premium is 7% higher than 2010 but started to reduce in 2013 following peaks in 2011 and 2012.
Changes in the consumer ‘shopping basket’ reflect increases in motor premiums during recent years but shows that industry initiatives are having a positive impact on premiums. For example the industry’s commitment to reduce uninsured driving has enabled police seizures and other enforcement measures to bring about a near 50% reduction since 2005.
Larger commercial basket
The third basket within the index shows that average premiums for the larger commercial ‘shopping basket’ have been mostly flat since 2010 with a slight increase of around 1% over the three year period.
Steve White, BIBA’s Chief Executive, who launched the index in the Houses of Parliament, said: “This new index will help us to identify trends and movements from more than £4 billion of insurance premium. This is an exciting milestone, as it will allow us to regularly track the cost of insurance and will provide a wider insight into the economic health of the country, the cost of living, and our sector’s role in that.”
Graeme Trudgill, BIBA’s Executive Director, said: “This index is important, it will help us to identify where and why insurance costs are increasing for small businesses and consumers. BIBA can then work with the Government and industry, and brokers can work with their customers, to achieve affordable premiums for customers.”
Theo Duchen, Co-Chief Executive of Acturis adds: “It is extremely important for an industry as significant as the general insurance industry to have informative measures to help participants and the broader public understand if and why premiums are moving up or down. This initiative is intended to bring some facts to bear on this important issue and we are extremely excited to be working in partnership with BIBA on this.”
Customers looking for suitable insurance can use BIBA’s Find a Broker service either on 0870 950 1790 or at www.biba.org.uk