The British Insurance Brokers’ Association (BIBA) and insurance IT service provider Acturis have launched a new general insurance price index.
It has been devised to 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.
The BIBA-Acturis Insurance Price Index shows that average premiums for an SME insurance ‘shopping basket’ have increased by 11.5% since 2010.
It says 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.
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, BIBA said.
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, 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.”
Theo Duchen, co-chief executive of Acturis, added: “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.”
