The floods and freak weather occurrences of last year wreaked havoc on the UK landscape, especially the residential sector. Pummelling the surface with torrential rain and hailstones the weather was relentless in its attack and the damage caused. Banks were broken and then the actual banks themselves were stretched as individuals sought financial assistance to aid in rebuilding their damaged properties and replacing personal property.

When it came to the vehicles that suffered damage, in many of the cases that were brought to the insurance companies the vehicle was written off, costing the industry billions of pounds, something they never factored upon. Based on the UK weather history, such risks were not taken into consideration when offering car cover policies. Not that it has proven to be a possible reality more insurers are making amendments to the small print for the various policies they have to offer.

Such freak weather occurrences prompted some financial analysts to predict a rise in a number of essential cover prices, car insurance being one of them. Interestingly that has not come to fruition. In fact the opposite appears to be true and a significant decline has been noted in the car insurance sphere. The good news comes from the AA insurance premium index where it was noted that the prediction of a rise in UK car insurance prices was in fact misguided and that a prediction in favour of the opposite outcome would have been a more accurate one.

How things have turned out so favourably for the customer is an apparent anomaly as the whole insurance industry relies on never actually having to make pay outs. In the event that they are required to do so they take into consideration the number of customers they have, the various risks they face based on location, customer age, car type and declared usage of the vehicle. With these factors in mind they assume that for their entire portfolio of customers only a small percentage will actually make a claim, especially as the discount offered to those who have a lengthy no claims history is an attractive one. Having done all of these calculations only to have a few raindrops and some weird weather bring it all to ruination was not only a frustration but a costly catastrophe for the industry.

The index went on to give real life examples of how the decrease has in fact affected the market, for the average UK driver looking to buy  fully comprehensive motor insurance the prices have actually dropped by 0.5% in the first quarter of this year. In monetary terms, where you would have paid £685.29 in the previous quarter, the drop means you would now only pay £681.93. Similarly for those that opt for third party, fire and theft the average price has dropped by an impressive 0.9%, no doubt a great saving for those looking to purchase this kind of cover. As a whole this brings the average cost of UK motor insurance down from £846.28 to £838.50, great news for UK motorists.

Andrew Strong, the chief executive of AA insurance commented that in order for the “car insurance industry” to “become profitable by the end of 2009” as suggested by a recent Datamonitor report, there would need to be an “annual premium increase of 20 per cent” something that the latest AA index shows to be far from a realistic goal for the industry. When discussing the merits of the anticipated price increase for the UK motorist based, it was noted that the £3 billion worth of damage that was caused by the freak weather and flooding of last year would undoubtedly be passed onto the motorist to balance the costs to the industry.