Premiums fall due to online insurers

A new study has revealed that online car insurance quotes are 8.2% cheaper than those given over the phone. Insurance is now one of the many services discounted if purchased online.

According to research firm, Consumer Intelligence, around 10.4m motorists bought their car insurance over the phone last year. Savings of around £379m in premiums could have been made if they had purchased their policies over the Internet. With the Internet delivering cheaper premiums to drivers, quotes are being driven down.

Consumer Intelligence found that when buying online the average car insurance premium was £404.98 compared with £441.32 when purchased over the phone.

Last year, 53.1% of motorists bought their cover over the phone and only 33.4% doing so online. These figures were despite the fact that 70% of car insurers offer online discounts, the survey revealed.

As the industry looks to cut costs and boost profits, many are looking to entice consumers into buying their policies online. As well as the insurance market, the credit card and personal loans markets have become fiercely competitive with the advent of Internet only companies. With fewer overheads and lower costs, these firms are able to offer some of the lowest quotes around forcing the large high street firms to follow suit. The savings Internet firms make are usually passed onto the customer.

Two in five insurers offer online car insurance premium discounts of 10% or more. Ian Hughes, managing director of Consumer Intelligence, said: “The number of motorists purchasing cover online is growing rapidly. Last year, around 33% of all car insurance policies were bought online compared to 22% in 2003.

The car insurance market is already fiercely competitive and the last few years have seen a rise in the number of internet-only insurance companies. However, recent studies have shown that it’s generally large and established firms who are most likely to offer the best value online.

All of this is good news for the driver who can only benefit from such competition through lower premiums. Even when obtaining a quote over the phone, be sure to ask if there are discounts when buying online.

Companies such as Direct Line, Esure, Halifax and Tesco offer competitive premiums, which are further discounted when purchased online. Add to this the fact that one does not have to endure those infernal recorded messages over the phone, and it is easy to why buying insurance policies online is growing in popularity.

7/6/05